Tim Leonard
Remortgaging can save you a significant amount of money across the entire time you’re a mortgage borrower. But is it best to take out a new mortgage deal with a different provider or should you remortgage with your existing lender? Here’s what you need to consider.
Think carefully before securing other debts against your home. Your home may be repossessed if you do not keep up repayments on a loan or any other debt secured on it
Can you remortgage with the same lender?
Yes, it is possible to remortgage with the same lender. Switching to a different deal with your current lender is usually referred to as a mortgage product transfer. If you’re not looking to borrow more or make other changes to your mortgage, it can be a relatively straightforward process with minimum admin and potentially few or no fees. So it makes sense to check the deals your current lender is offering first.
That said, you should also research the wider market too. Otherwise, you will be restricting your options and potentially missing out on a better deal with a different lender, which could save more money.
» MORE: Check current mortgage rates
What are the advantages of remortgaging with the same lender?
Some of the main benefits of remortgaging with your current lender include:
- It will usually be quicker and simpler than an external switch. Because you’re already a customer, there’s likely to be less admin and fewer checks, as long as you’re not borrowing more or changing anything other than the deal itself. This means the process may only take days rather than the weeks or months it can take with a new lender.
- It may save you money in fees. You won’t usually have to pay valuation and solicitor fees, because a full valuation and legal work may not be needed for a simple, internal switch.
- It won’t usually involve affordability and credit checks. A lender may skip these checks if you’re not adding to your mortgage or changing terms, and are up to date with your repayments and not in arrears. This may be useful if a change in your circumstances means you may struggle to get a mortgage elsewhere.
- 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 moving onto its standard variable rate (SVR).
In 2023, the majority of existing mortgage borrowers who remortgaged chose to remain with their current lender. According to the banking and finance trade body UK Finance, lenders carried out £219 billion worth of product transfers last year, compared with £65 billion of external remortgaging.
» MORE: How long does it take to remortgage?
Why remortgage with a different lender?
Even if your current lender has offered a decent remortgage deal, you won’t lose anything by seeing what else is out there.
Some reasons to make an external switch are:
- You’ll have more choices and may benefit from more competitive rates.
- You could save money if you find a better deal, even if you have to pay fees for the switch. This is where calculations and comparisons of different scenarios are important, and a mortgage repayment calculator can help.
- Other lenders might offer incentives, where you don’t have to pay property valuation fees, legal fees or arrangement fees, or you can get cashback. None of these on their own should be reasons to opt for a particular deal, but they should be factored into your calculations.
- If your property has increased in value when the new lender puts it through a full valuation, it may put you on a lower 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’ll need to look elsewhere. Other lenders may have mortgages that offer more flexibility or features that better suit your needs.
Getting mortgage advice and talking to a broker, such as our partner London and Country Mortgages (L&C), can help you work out what’s available and if you may need to switch to a new lender. Whichever broker you use, check whether they will carry out a whole-of-market search, as not all do.
» MORE: Best mortgage lenders
When isn’t it a good idea to switch lenders?
When you change lenders, you will in effect be applying for a new mortgage. This means affordability checks 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 deal.
If your financial position isn’t as good as it was, perhaps because your income has reduced or your home has dropped in value, you may find it difficult to remortgage with a new lender. A product transfer with your current lender may be more achievable, provided you’re only changing the rate, have kept up with repayments and aren’t in arrears.
If you want to make changes to your mortgage, such as shortening your mortgage term or borrowing more, you will have to pass 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: When can you remortgage?
How to remortgage with the same lender
The process of remortgaging with the same lender tends to be fairly straightforward. If all you are doing is moving to a new deal and not changing anything else, your existing lender may be happy to proceed without another affordability check, credit check or property valuation.
If your deal is due to expire soon, your lender will likely contact you somewhere between three and six months ahead of time to outline your options. This will include details of the rates and deals it is offering.
Once you have weighed up your options, and found a deal suitable to your circumstances, you may be able to confirm your selection online or by phoning your lender. After you have agreed to the terms you’ll receive confirmation of your new deal, perhaps within days.
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 mortgage 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 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 around six months before the date your existing mortgage deal ends.
» MORE: How remortgaging works
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 when staying with your current lender. This is because there isn’t usually legal work involved if you’re just moving to a different rate.
If there are changes, such as adding or removing a name on the mortgage, it will usually involve legal work.
» MORE: Do you need a solicitor to remortgage?
Can you remortgage with the same lender and release equity?
Yes, it is possible to release equity by remortgaging with your current lender. Essentially this involves borrowing more on your mortgage by using the equity in your home as security. You can work out how much equity you have by subtracting what you owe on your mortgage from the value of your property. Some of the main reasons people remortgage to release equity include to repay debt, remortgage to pay for home improvements, or raise cash for other purposes.
» MORE: How to remortgage to consolidate debt
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 fees for the new deal. 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, and there may also be some admin fees to consider.
Depending on when you schedule the switch, your provider may waive early repayment charges 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.
» MORE: Remortgage costs & fees explained
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