Remortgaging with the same lender: Should you do it?

We’re all wondering how to get the best mortgage deal to keep our mortgage payments as low as possible, given the rise in mortgage interest rates.

Remortgaging with your current lender is frequently the best option to consider first as it can save time, administrative costs, and other expenses. But remortgaging with a different lender may give you better options.

Remortgaging, or getting a new mortgage product, is based on the idea that you should always get the best mortgage product for your unique situation. This could mean finding a better interest rate, more flexible mortgage terms, or borrowing more more.

Remortgaging allows you to move your existing home loan to a new rate or better terms, either with your current lender or a new one. This can be a great way to save money on your mortgage payments, especially if interest rates have fallen since you first took out your mortgage

But should you remortgage with the same lender or with a new lender? This is a question that many homeowners face when their mortgage term is coming to an end

In this article, we’ll explore the pros and cons of remortgaging with your current lender and with a new lender, to help you decide which option is right for you.

Remortgaging with the same lender: Pros and cons

Pros:

May save you money: If your current lender is offering a lower interest rate than other lenders, remortgaging with them could save you money on your monthly payments.
Can save time: Remortgaging with the same lender can be a quicker process than remortgaging with a new lender, as you won’t have to provide as much documentation.
May be easier to get approved: Your current lender already knows your financial history, so you may be more likely to get approved for a remortgage with them than with a new lender.
Some lenders may not require an additional credit check: If you have a good credit history with your current lender, they may not require an additional credit check when you remortgage. This can save you time and money.

Cons:

You may not get the best deal: Your current lender may not be offering the best interest rate on the market. It’s important to shop around and compare rates from different lenders before you decide to remortgage.
You may not get the best advice: Your current lender may be more likely to try to sell you a new product rather than give you impartial advice. It’s important to talk to an independent mortgage advisor to get the best advice for your situation.

Remortgaging with a new lender: Pros and cons

Pros:

You will have the opportunity to get the best deal on the market: By shopping around, you can compare rates from different lenders and find the best deal for your situation.
There may be perks such as cashback or free legal fees: Some lenders offer incentives to attract new customers, such as cashback or free legal fees.
A thorough evaluation will be carried out on your property: This could mean finding out you have a better loan-to-value (LTV) ratio, which could give you access to lower interest rates.

Cons:

It may be more time-consuming: Remortgaging with a new lender can be a more time-consuming process than remortgaging with your current lender.
It may be more difficult to pass strict affordability tests: New lenders may have stricter affordability tests than your current lender.
Can be costly due to legal fees and potential early repayment charges: You may have to pay legal fees and early repayment charges if you remortgage with a new lender.

Do I have to pay early repayment charges if I remortgage with the same lender?

In most cases, you will not have to pay early repayment charges if you remortgage with the same lender. However, there are some exceptions to this rule. For example, if you have a fixed-rate mortgage, you may have to pay an early repayment charge if you remortgage before the end of your fixed-rate term.

It’s important to check the terms and conditions of your mortgage agreement to see if you will have to pay any early repayment charges.

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

You usually do not need a solicitor to remortgage with the same lender. This is because the lender will already have all of the necessary documentation about your property. However, if you are unsure, it’s always best to check with your lender.

Do I need a valuation when remortgaging?

You will usually need a valuation when remortgaging with a new lender. This is because the new lender will want to make sure that the property is worth the amount of money they are lending you. However, if you are remortgaging with the same lender, you may not need a valuation. This is because the lender will already have a good understanding of the value of your property.

Summary

Ultimately, the decision of whether to remortgage with your existing mortgage lender or with a new lender is up to you. There are pros and cons to both options, so it’s important to weigh them up carefully before making a decision.

If you are unsure which option is right for you, it’s always best to talk to an independent mortgage advisor. They will be able to give you impartial advice and help you find the best deal for your situation.

Disadvantages of remortgaging with the same lender

Restricted to one lender

Restricting yourself to a single lender may result in you losing out on better offers from other lenders that are available in the mortgage market.

By all means, find out what your current lender will offer for remortgaging with them. But use that as a ballpark to then shop around. My preferred whole of market mortgage broker is Habito, if you need somebody impartial to talk to about remortgaging.

May not be best for your circumstances

Your current lender may encourage you to stick with them because they don’t want to lose your business. Therefore, even though you may believe you’ve gotten a good deal, it’s possible the lender did not have your best interests in mind.

May miss out on a lower LTV

If you remortgage with the same lender, they probably wont perform an up-to-date valuation of your property. If the market has increased and you have paid off your current mortgage, you may be eligible for a better interest rate from a new lender and a new valuation because of a lower loan-to-value ratio.

What happens when remortgaging with the same lender?

Depending on what’s changing with your mortgage, you will either do a rate switch or a product switch to remortgage with the same lender.

First, you can check your mortgage account online, where you should be able to see any available product switches. Or get in touch with your lender to see what they can offer you going forward before your current mortgage agreement expires.

Mortgage Early Repayment Charge Explained

FAQ

Do I have to pay early repayment charge if I remortgage?

By remortgaging when your current deal ends, you could also avoid paying an early repayment charge. But make sure you read your mortgage agreement closely, so you know when you’re allowed to seek a new mortgage without paying an early repayment charge.

What happens if you remortgage with the same lender?

Remortgaging to a new deal with the same lender is known as a product transfer. It’s often quicker than switching mortgage lenders, and it also usually involves fewer affordability checks.

Is there any way to avoid early repayment charge?

Get a mortgage without charges Your lender may offer a mortgage deal without early repayment charges – ask about this when agreeing your deal. Some fixed rate mortgages don’t include early repayment charges, or you may be able to avoid paying one after repaying for a number of years.

Do lenders ever waive early repayment charge?

Is there any way to avoid an early repayment charge? While some mortgage products come without ERCs, they often carry higher interest rates. If you need flexibility, staying on an SVR for a short period after your deal ends can help you avoid these charges.

How can I avoid paying an early repayment charge on my mortgage?

If you want to avoid paying an early repayment charge on your mortgage then you should: Avoid overpaying your mortgage by more than allowed under the terms of your mortgage deal – usually 10% of the outstanding balance each year.

What is the early repayment charge on a mortgage?

The early repayment charge will vary depending on the lender and the mortgage product. If a mortgage can potentially charge an ERC then it is usually between 1% and 5% of the outstanding mortgage balance but your mortgage contract will outline the exact limits and charges that apply to your mortgage deal.

Should I remortgage before a fixed rate?

Prior to deciding whether or not remortgaging before the conclusion of a fixed rate is ideal for you, it is important to be mindful of potential costs such as early repayment charge (ERC) and exit fee. An early repayment charge is often 5 – 1% of the remaining mortgage depending on your mortgage agreement with your current mortgage lender.

Should I remortgage or pay off my mortgage early?

If you don’t want to be stuck with your current mortgage deal for the long term, you can remortgage to a new deal or pay off your mortgage early. But before you do hit the exit button on your mortgage, be warned.