Remortgage with the Same Lender or Switch

If you remortgage, you can either move to another deal with your current lender or switch to a new mortgage deal with a different provider.

Most people remortgage to save money, but you may also want a different type of mortgage that is more suited to your changed circumstances. This might be anything from borrowing more for home improvements to getting a more flexible mortgage that allows overpayments.

If you move to a different deal with your current lender, it’s called a mortgage product transfer. If you’re not making changes to the terms, it can be a straightforward process with minimum admin and potentially few or no fees. So it makes sense to check what rates your current lender can offer you to transfer to another deal with them first.

But it’s a good idea to research the wider market too. Otherwise, you will be restricting your options and potentially missing out on getting a better rate with a different lender – and saving more money.

Whichever route you choose, you’ll want to make sure switching won’t cost you more in fees and charges than you save with a lower interest rate. Here’s how to weigh up if you should stay or go.

Do you have to remortgage?

No, there is no obligation to remortgage, and it isn’t right for everyone. But if your initial deal has ended you must review how that change affects you.

More generally, if you want to save money over the lifetime of your mortgage, it’s sensible to review the deal you are on from time to time and see what other providers are offering. This will help make sure you aren’t missing out on significant savings.

As a quick refresher: a mortgage term is the long-term contract that lasts for a specific period of time, such as 25 years, over which you agree to pay back your mortgage. During this period, people usually switch deals to get better rates a few times.

The best time to remortgage will depend on the type of agreement you have and interest rates at the time, but your personal circumstances also come into play.

Typical motivators are when:

Your introductory deal, such as a five-year fix, is nearing its end, and you want to avoid being moved to your lender’s more expensive standard variable rate (SVR). This is the reason why most people remortgage. According to research in October 2021 by adviser L&C Mortgages, failing to shop around for the best mortgage deal could see borrowers paying over £2,500 more a year than they need to.
Interest rates have changed or you’re concerned they might rise.This may mean you want to lock in a fixed rate. If you’re on a variable rate with no early repayment charge (ERC), you may want to review your current deal against new deals at least every year.
You want to make changes to your terms.This might be because you are removing a name from the mortgage, want to release equity from your home since it has risen in value, want a different type of mortgage, or are considering consolidating your debts.

Despite these motivators, a 2021 Barclays survey found that nearly half (49%) of people asked have never switched their mortgage deal. Many said they were put off by the potential hassle and paperwork, or because they didn’t feel knowledgeable enough to do it.

» MORE: When should you remortgage?

Why remortgage with the same lender?

If you’re not making changes to your mortgage, switching to another deal with your current lender is usually very straightforward. This is because:

It will usually be quicker than an external switch.It can take days rather than the weeks or months it would take with a new lender.But don’t rush into it and make sure you’re clear on the terms and any costs before going ahead.
It may save you money in fees.You won’t usually have valuation and solicitor fees, and you may also avoid a booking and arrangement fee for a simple, internal switch.
It won’t usually involve affordability checks. And your lender may not need to make credit checks, provided you’ve kept up with payments and are not in arrears. This means the admin side of things will be much simpler than when you first took out your mortgage or changed lender.
It could open up attractive follow-on deals, with preferential rates. Your lender will usually get in touch a few months before your introductory period ends with the rates it can offer you. This should outline how that will affect your monthly payments compared with ending up on its SVR.
Your lender may let you switch early to a lower rate a few months before your current deal ends, without a penalty.

Most people take this route rather than remortgage with another lender. In 2019, lenders carried out £160 billion worth of product transfers, according to UK Finance.

Why remortgage with a different lender?

Even if your current lender has offered a decent switch, you won’t lose anything by seeing what else is out there.

Some reasons to make an external switch are:

You’ll have a lot more choice and potentially benefit from more competitive rates.
It could still be worth it for the savings you make, even if you have to pay fees for the switch. This is where calculations and comparisons of different scenarios are important, which is where a remortgage calculator can help.
Lenders might offer incentives such as cashback as part of the switch. While not a reason to remortgage, it could be factored into the possible savings.
Some offer fee-free switches, where you don’t have to pay property valuation fees, legal fees or arrangement fees. Just make sure the interest rate isn’t higher as a result.
If your property has increased in value when the new lender puts it through a full valuation, it may put you on a different loan-to-value (LTV) band. This can open up more competitive deals.
If you want a mortgage product your current lender doesn’t offer, you may have more luck with other lenders.

A mortgage broker or adviser can help you work out what’s available and if it’s financially worthwhile to switch. Check whether they will carry out a whole-of-market search, as not all do.

You can use our mortgage comparison tool to search for remortgage deals across the wider market, and it won’t affect your credit score.

When isn’t it a good idea to switch lenders?

When you change lenders, you will effectively be applying for a new mortgage. This means the same affordability checks as when you first took out your mortgage, and a full valuation of your home. A low credit rating could mean you can’t access the lowest rates and you may even struggle to get a remortgage.

If your financial position isn’t as good as it was, perhaps because your income has reduced or your home has depreciated in value, you may find it difficult to remortgage with a new lender. A product transfer may be more achievable, provided you’re only changing rate and you have kept up repayments and aren’t in arrears.

If you want to make changes to your mortgage, such as shortening your term or borrowing more, you will usually have affordability checks, regardless of the lender. You may want to leave remortgaging until you’re in a better financial position. Improving your credit score and making overpayments on your mortgage, when it’s affordable, can help.

» MORE: Are you ready to remortgage?

How to remortgage with the same lender

You might be surprised how quick and simple a mortgage product transfer is, provided all you are doing is shifting to a new rate.

If your deal is due to expire soon, your lender will likely contact you to outline your options a few months ahead of time. This will include the initial rates it is offering and how long for, across fixed and variable rates, and lasting different lengths of time. Make a note of the expiry date of the offers, especially if you’re researching your options a few months ahead of your proposed switch date.

Once you have weighed up your options and considered any charges, if you make your selection through an online application the transfer could take a matter of minutes. After you have agreed to the terms your lender will send you confirmation of the switch, usually within just a few weeks.

How to remortgage with a new lender

Moving to a different lender may not be quite as easy as sticking with your current one. But a bit of extra admin and a slightly longer processing time could be worth it if you make substantial savings on a deal with a different provider.

Before looking at the wider market, have these details about your current agreement handy:

How long is left on your mortgage term?
How much of your loan is left to pay off?
Will you need to pay a penalty and exit fee for leaving your current deal and if so, how much?
When does the lock-in period end, so you can switch without a penalty?
What rate of interest are you currently paying, and what are your monthly payments?

As there is more paperwork and process involved, it will take a little longer to complete a remortgage with a new lender. You’re likely to be looking at four to eight weeks, though it will depend on the paperwork and how straightforward your circumstances are.

Ideally, try to start researching your remortgage options six months before the date you plan to switch.

Do you need a solicitor to remortgage with the same lender?

If you aren’t making changes to your mortgage, you won’t usually need to use a solicitor or conveyancer for a product transfer. This is because there isn’t usually legal work involved if you’re just moving to a different rate.

Though for some changes, such as adding or removing a name on the mortgage, it will usually involve legal work. You may need to use a solicitor approved by your lender, so always check. Often, providers will cover legal fees for you. Legal fees for remortgaging are often lower than when you first buy a property, as there is less work involved.

Does it cost less to remortgage with your current lender?

It depends. It may cost less in fees to stay put, but you’ll need to balance that against the savings you might make through lower monthly payments if you find a lower interest rate elsewhere.

If you’re simply switching to a different rate with your provider, you won’t usually need to pay valuation or legal or fees for the new deal. In fact, it’s perfectly possible to have a product transfer with few to no fees. However, some will charge an arrangement fee for setting up the new product, which can be up to £2,000, and there may also be broker fees or other admin fees to consider.

Depending on when you schedule the switch, your provider may not charge you for leaving the deal you’re on a few months before it ends if you remain a customer.

But again, even if you would have to pay fees for switching lenders, you may still be able to make up for that with savings made by securing a lower interest rate with a new lender.

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