When your mortgage deal ends, your rate usually goes up as it reverts to your lender’s standard variable rate. To avoid paying more, you can switch to a new mortgage deal at this point.
You can either switch to a new deal with a different mortgage provider – known as remortgaging – or move onto a new deal with your current lender – known as a product transfer.
Both options give you many of the same benefits but changing your mortgage provider can have additional pros and cons.
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Why switch mortgage provider?
When you take out a mortgage, lenders give you a discount from their standard variable rate (SVR) for an initial period. This is usually two, three or five years but 10-year deals are also available. Most people take out a fixed-rate deal so their repayments don’t go up over the deal period.
When your deal ends your rate could jump by more than two percentage points. This is because the average SVR was 7.99% at the start of September 2024, according to financial information group Moneyfacts. At the same time the average two-year fixed rate was 5.85% borrowing 90% of the property’s value and just 5.02% borrowing 60%.
The jump could be even bigger if you took out a fixed rate two or five years ago, as mortgage rates were much lower then. However, by switching to a new deal you can minimise the increase in your mortgage payments. You may need to change mortgage provider to get one of the cheapest deals available.
Saving money isn’t the only reason to switch lender, though.
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What are the benefits of switching mortgage provider?
There are a number of potential benefits to moving to a different mortgage provider versus getting a new deal with your existing provider, including:
To get the best deal
Your existing provider may not be offering the best deal for your needs. It’s worth speaking to a mortgage broker, who can search the whole available market to find you the best option.
To get specific mortgage features
You may want the option to make overpayments of more than your current lender allows, for example. Alternatively, you may want a type of product your lender doesn’t offer.
To get better customer service
If you’re not happy with the service you’re currently getting, you could get a better one by switching lender.
To get an up-to-date mortgage valuation
You could get a mortgage at a lower rate if the value of your property has gone up since you took out your current mortgage. And this could make your loan-to-value (LTV) smaller.
Your LTV is the percentage of your property’s value you’re borrowing. So for example, if your property is worth £500,000 and your mortgage is £450,000, your deposit is 10% (£50,000) and your LTV is 90% (£450,000).
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What are the risks of switching mortgage provider?
There are also potential downsides to switching mortgage provider, such as:
You have to make a new mortgage application
As you’re applying from scratch, the lender looks at your finances to ensure you can afford the mortgage, does a credit check and carries out a valuation of your property. If things have changed since you took out your current mortgage, you might not be able to get a new one on such good terms as with the same lender. You could even be turned down.
It could take longer to get a new deal
The extra checks a new lender has to carry out before granting you a mortgage means the process is likely to take longer than with a product transfer.
You might have to pay set-up fees
There could be valuation and legal fees to pay with a new lender. However, there are many remortgage deals without them. An arrangement fee could apply whether you’re switching lender or not. You may also have to pay an exit fee to leave your current lender.
Always look at the total cost over the deal period, including fees, when comparing different options.
You won’t benefit from existing customer deals
Many lenders offer better deals to existing borrowers. You won’t benefit from these if you switch provider.
Always check what you can get from your existing lender before you look elsewhere. It may even waive any early repayment charges if you want to transfer to a new product before your current one ends.
How much could my mortgage repayments be?
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When can you switch mortgage provider?
While you can usually switch at any time, it’s best to do it when you no longer have to pay early repayment charges (ERCs). Fixed-rate deals tend to have ERCs that apply throughout the initial period and these could mean you won’t save money by switching.
You should start the process three to six months before your current deal ends so you can move onto your new deal as soon as your old one finishes.
In some situations, you could save money by switching even if you do have ERCs to pay.
When can’t you switch mortgage provider?
You might not be able to move to a new lender if your remaining mortgage debt is below a certain amount - £20,000, for example – or your term is shorter than five years.
How do you switch mortgage provider?
You can switch mortgage provider either by applying directly to a lender or through a mortgage broker. Many lenders let you apply online. You’ll need to supply a range of documents, such as bank statements, payslips, proof of address and proof of ID.
Frequently asked questions
How easy is it to switch mortgage lenders?
It’s usually straightforward but more complex than switching your deal with the same lender as you need to provide documents and go through affordability and valuation checks.
How long does it take to switch mortgage?
It can take one to two months to switch to a new mortgage lender, depending on your situation. Switching to a new mortgage deal with the same lender is quicker and could take just a few weeks.
How much does it cost to switch mortgage?
To switch lender, you may have to pay an arrangement fee for a new mortgage, which could be around £1,000, plus valuation and legal fees if they’re charged. If your current lender has an exit fee this could be £40 to £125. ERCs would be 0.75% to 3% of the outstanding balance if applicable.