How To Change Mortgage Providers
If your mortgage deal is coming to an end you may want to reduce your repayments, or release equity from your property. If this is you, changing mortgage providers could be the answer. When you switch to a different lender, this is known as a remortgage.Â
If youâre nervous at the thought of having to apply for a mortgage all over again, donât worry. Remortgaging your home doesnât have to be stressful or time consuming. With the right help and advice, the process can be smooth sailing and hassle-free. Â
Letâs explore how to change mortgage providers with as little faff as possible.
In this guide
- Reasons to change mortgage providers
- Can I change my mortgage provider at any time?
- How easy is it to change mortgage provider?
- How long does it take to change mortgage provider?
- How much does it cost to change mortgage provider?
- Are fee-free remortgages worth it?
- How often should you change your mortgage provider?
- What are the benefits of switching mortgage providers?
- Is it worth switching mortgage providers?
Reasons to change mortgage providers
First thingâs first, letâs look at why you might switch mortgage providers.
1. Your fixed-term is about to end
If youâre approaching the end of a fixed rate mortgage term, you might be looking for ways to keep costs low. When your fixed deal ends, youâll usually be moved onto the lenderâs standard variable rate (SVR). If your lenderâs SVR is higher than your current fixed rate, your mortgage payments may increase.
Variable rates tend to be higher than fixed rates â but not always. During periods of high interest, you can find yourself paying a price for the security of a fixed rate deal. In some cases, variable rates can be lower, but they can also fluctuate from one month to the next.
You may be able to save money by switching to a new mortgage provider. Even if your current lender offers you a new deal, itâs worth seeing what else is out there before making a commitment.
To learn more, take a look at our guide: How long should I fix my mortgage for?
2. You want to overpay your mortgage
Most lenders will let you overpay your mortgage if you want to. The exact amount you can overpay will vary from one lender to the next, but most of the time you can overpay up to 10% of your mortgage balance each year. If your current lender doesnât allow overpayments or they wonât let you overpay as much as youâd like, changing mortgage providers could be the answer.Â
Keep in mind that if youâre currently locked into a fixed rate mortgage deal, you may have to pay a charge to leave your current lender early. So itâs worth working out whether the amount youâll save in interest is worth the initial cost of switching.Â
3. You want a more competitive mortgage deal
If your homeâs value has increased or youâve been making overpayments to increase your home equity, you may be eligible for a more competitive mortgage deal. If your current mortgage provider doesnât offer a better deal or they wonât let you switch to one of their other offers, it may be worth changing to a different mortgage provider.
Can I change my mortgage provider at any time?
Yes, itâs technically possible to change mortgage provider at any time, but youâll need to pass the new lenderâs affordability checks first.Â
If your financial situation has changed since you took out your current loan or the new lender has stricter criteria than your current mortgage provider, you might find it harder to switch.
Changing mortgage providers can sometimes be expensive, too. If youâre currently part-way through a fixed mortgage term, your lender may insist you pay an early repayment charge (ERC) to get out of the deal early.
How easy is it to change mortgage provider?
Changing mortgage provider can be fairly easy â â especially if you use a mortgage broker. Theyâll know which lenders are most likely to approve your application and which are best to avoid.Â
A broker can also help you overcome common remortgaging obstacles. This can be particularly helpful if any of the following apply:
- Your credit score has changed
- Youâve lost your job
- Your income has fallen
- Youâve become self-employed
- Youâre trying to get a mortgage by yourself
- Youâve recently had a baby
If your circumstances have changed since you received your original mortgage offer, talk to Tembo.Â
Learn more: What to do if youâre struggling to remortgage
How long does it take to change mortgage provider?
You can usually complete the mortgage switching process within a month or two. If your application is particularly complicated and youâre applying directly through a lender, it can sometimes take a little longer.
Using a mortgage broker can often speed up the process. An experienced broker will have helped hundreds of people switch to a different mortgage provider, so theyâll know the process like the back of their hand. If youâre moving house soon or youâd like to remortgage your current home, get in touch with our team to find out how we can help.
We can help you switch
At Tembo, we help buyers and remortgagers boost their affordability so they can get the best mortgage deal for them, working with over 100 lenders and 20,000 mortgage products. Create a free Tembo plan to see what you could afford.
How much does it cost to change mortgage provider?
Changing mortgage provider can be a smart financial decision, but you may have to pay some upfront costs to complete the switch. These costs can vary depending on your lender and circumstances, but they can sometimes set you back between ÂŁ3,000 to ÂŁ5,000. Weâve broken down the different costs below.
If youâre changing mortgage providers before your fixed deal is over, you may have to pay even more than this.
Early Repayment Charges (ERC)
Itâs common for lenders to charge an early repayment fee if you leave a fixed-rate deal or introductory period. ERCs are usually based on the amount you owe and how far you are into your deal. Most of the time you can expect to pay between 1% and 5% of your outstanding mortgage.Â
The closer you are to your fixed deal ending, the less youâll usually pay. So if you were to switch mortgage providers just a few months into a 5-year fix, you may be charged 5% of the outstanding balance.Â
If you were to leave just one year before your fix ends, you might pay just 1% in early repayment fees. The exact fee will vary depending on the lender.
Exit fees
You may be charged an exit fee (aka deeds release fee or mortgage completion fee) to close your mortgage account. The costs vary from one lender to the next but they usually fall somewhere between ÂŁ50 to ÂŁ300. Some lenders will charge an exit fee even if youâre not currently tied into a fixed rate deal.Â
Arrangement fees and booking fees
An arrangement fee (aka product fee or completion fee) is a fee sometimes charged for taking out a mortgage product. Arrangement fees can set you back between ÂŁ1,000 to ÂŁ2,000, so itâs important to factor these fees into the overall cost of your mortgage deal.Â
There may be an option to add your arrangement fee to your mortgage so you donât have to pay it upfront, but this can work out more expensive in the long run. Not only will it increase your monthly payments, youâll pay interest on it too.
When you apply for a mortgage deal, a booking fee of up to ÂŁ250 may also be charged. This might not be refundable, even if your mortgage falls through.  Â
Thankfully, both arrangement fees and booking fees are becoming less common when remortgaging, so you may be able to avoid these charges altogether.
Valuation
Your new lender will usually want to carry out a valuation on your property and they may pass the cost of this onto you. A valuation will usually cost around ÂŁ250 but you may have to pay up to ÂŁ1,500. The amount youâll pay will usually depend on the propertyâs size. Bigger and more expensive properties will often demand more thorough valuations.
Conveyancing
Youâll also need to hire a conveyancing solicitor to manage the legal side of the process, even if youâre not moving house. The cost can vary depending on your chosen solicitor, but expect to pay between ÂŁ800 to ÂŁ1,500.
Are fee-free remortgages worth it?
Many lenders offer fee-free remortgages as an incentive to leave your current provider and switch to them. Having your new lender cover your fees might seem like a great deal, but make sure you calculate the true cost of your new mortgage.Â
Your savings could be undone if you end up paying a higher interest rate than youâd find elsewhere.Â
How often should you change your mortgage provider?
Itâs completely up to you how often you change your mortgage provider. Some people stay with the same lender from the day they buy their home to the day they become mortgage-free.Â
But sticking with the same lender for long periods of time can be expensive, particularly if youâre loyal to them for 20 or 30 years or more.Â
There are hundreds of mortgage providers across the market and each one introduces new deals every year. Some lenders even bring out new mortgage products monthly. By staying with the same lender for several years, you could miss out on more affordable deals elsewhere.Â
We recommend speaking to a mortgage broker if:
- Your fixed rate deal ends within the next 3-6 months
- Youâd like to release equity from your home
- Youâre struggling to afford your current repayments
- Youâre hoping to move house in the next 6 months to a year
- Your lender wonât let you overpay
What are the benefits of switching mortgage providers?
Your mortgage is likely to be one of your biggest monthly expenses. By switching to a better deal with a different mortgage provider, you can reduce your outgoings and save money to put towards other things.Â
Remortgaging your property can also be a great way of releasing equity from your home. You could then use this money to travel, make home improvements or even help a loved one put down a deposit on their first property.Â
Unless the value of your property has risen significantly, releasing equity from your home may result in higher monthly payments or a longer mortgage term. Itâs a good idea to speak to a mortgage broker before making a decision. Theyâll help you work out what works best for you while looking for ways to keep things as affordable as possible.Â
Is it worth switching mortgage providers?
Whether itâs worth switching mortgage providers all depends on your personal circumstances. Switching to a new mortgage provider in order to remortgage your home can often save you money, particularly if youâve been stuck on a high interest rate or your homeâs value has increased since you took out your current mortgage.
However, switching mortgage providers can sometimes be costly. In some cases, paying more for your mortgage can allow you to achieve other goals. Thatâs why itâs really important to speak to a specialist mortgage broker before making a decision.
For example, letâs imagine you want to help your child or grandchild to buy their first home.Â
If theyâre struggling to save a deposit and youâre unable to give them money from your savings, remortgaging could help you make the most of the money thatâs tied up in your home. We call this process a Deposit Boost. You take out a small mortgage on your own property, so the released equity can be used as a deposit on theirs.Â
It can be hard to know whether changing mortgage providers is right for you or not. To get expert advice from our award-winning team, get in touch with the Tembo team today.Â
Unsure what to do? Talk to Tembo
It can be hard to know whether changing mortgage providers is right for you or not. To get expert advice from our award-winning team, get in touch with the Tembo team today.Â