Switching mortgages
Keeping an eye on your mortgage rates and what you are paying should be part of anyone’s financial planning. But all too often we only take action when we absolutely have to. Switching your mortgage account is a way of keeping on top of costs and making sure you are getting the best deal available. However, it might mean you switch mortgage deals when you are mid-way through a mortgage term, so it’s best to have an advisor on hand to help you look at the cost versus benefit of doing so.
Getting a new mortgage is a likely consideration when the term of your current one runs out, but what about changing mortgages after a year or so on the same rate? With the mortgage market changing so rapidly, there are always new deals out there. You could save hundreds or thousands of pounds if you switch to a better deal. What’s more, because we do all the research and paperwork, we take the hassle out of the process.
Why switch mortgage?
At the very least, you should review your mortgage when interest rates change, when your current mortgage deal comes to an end and once a year if you’re not tied in to early repayment penalties. New mortgage deals come on to the market all the time, so you could take advantage of a favourable interest rate.
Other reasons to switch mortgage include:
- When the value of your property has risen
This means that the gap between the amount you have left to pay versus the amount you borrowed is larger – making more competitive deals available to you.
- Your circumstances have changed
For instance, you may have started out with a joint mortgage and now be paying it on your own, your job might have changed meaning you want to pay less each month, or you have the flexibility to make overpayments from time to time.
Check you’re eligible
You may be able to switch to a better deal with your current lender, if you meet certain criteria. Ask your First Mortgage advisor to look into this for you and see what your options are. That way you can consider the packages available and possible savings without having to do the legwork.
If you want to switch to another lender offering more competitive deals, you are more likely to have to pay mortgage penalties. It may work out cheaper in the long run, but you’ll need to compare the exit fees with longer term savings because of lower interest rates.
Things to consider
Before switching, you need to check your mortgage agreement to see whether you have to pay early redemption fees. Your First Mortgage advisor will go through this with you and look at all the small print.
Penalties can be expensive – up to 4% of the amount you owe – but if you are switching to a new deal with the same lender, your advisor may be able to negotiate over what you pay.
Your advisor will then look through the deals on the market to see what would work best for you, considering your financial picture, flexibility and needs. They’ll also look at any additional fees you may have to pay, such as arrangement fees, solicitor’s charges and valuation fees.
You can then review the costs of switching versus the savings you’ll gain and decide on the best course to take. You can, after all, stay on the same mortgage deal if it turns out to be too expensive to leave.
Applying to switch your mortgage
Applying to switch your mortgage to a new deal is straightforward. Just make an appointment with your advisor, take in the relevant paperwork and away you go.
How to apply
Applying to switch a mortgage is much like applying for your first mortgage. The lender will want to know about your financial situation, credit history and ability to pay.
When you’ve decided to switch your mortgage, your First Mortgage advisor will take you through it step by step. You’re likely to need the following, though your advisor will let you know exactly what is involved.
– proof of your income from the last three months (payslips or business accounts, bank statements and income tax accounts)
– proof of identity, such as a passport or driving licence
– proof of address, such as a recent bill
– last three months bank statements
Completing your switch
Once you’ve completed your switch, we’ll stay in touch to make sure all the paperwork comes through and is correct, and to keep you posted on any suitable deals that may suit your financial circumstances. Remember that if anything changes, or you want to review your mortgage and what you pay, you can get in touch and we’ll talk through your options, free of charge.
What happens next?
Once you’ve applied to switch your mortgage, you’ll be sent a mortgage offer to review with your advisor. If you accept the new terms, your mortgage deal will be put into effect and you’ll receive details of your new payments in the next week to ten days.