Is your current mortgage deal coming to an end? You might be surprised to learn that you don't need to wait until the last few weeks to start exploring your options.
In fact, starting your mortgage review six months before your existing deal ends is often a good idea. It gives you time to compare rates, understand your options and potentially secure a new mortgage deal well in advance.
Whether you're a homeowner in Gloucester, Cheltenham, Stroud, the Cotswolds or elsewhere in the UK, here's what you need to know about when to start looking at remortgaging.
When should you start reviewing your mortgage?
As a general guide, six months before your current mortgage deal ends is a good time to start reviewing your options.
This doesn't mean you need to change your mortgage immediately. It simply gives you time to understand what's available and plan your next steps.
Many mortgage lenders allow you to apply for a new mortgage several months before you need it to begin, although the exact timescales vary between lenders.
Starting early could help you avoid leaving everything until the last minute, particularly if you decide to move your mortgage to a different lender.
What's the difference between a product transfer and a remortgage?
When your existing mortgage deal is coming to an end, you generally have two options, both of which a mortgage broker can help you with.
1. Switching rates with your existing lender
This is commonly known as a product transfer.
You're staying with the same mortgage lender but moving onto a new interest rate or mortgage product.
Your existing lender will have its own rules about when you can secure a new rate. Some allow customers to arrange their next deal several months before their current one ends.
If you're not changing your borrowing or other mortgage arrangements, this can sometimes be a relatively straightforward process.
2. Remortgaging to a different lender
A remortgage involves moving your mortgage from your existing lender to a new one.
This means making a new mortgage application, which will generally involve affordability and eligibility checks, as well as an assessment of your property.
A mortgage broker can start reviewing the wider market before your current deal ends, comparing what's available from different lenders alongside the options offered by your existing lender.
The important distinction is that reviewing remortgage rates early doesn't mean brokers have exclusive early access to mortgage products. It's about giving yourself enough time to explore the market and, where appropriate, arrange a new mortgage in advance.
Can you secure a new mortgage rate before your current deal ends?
Yes, it's perfectly normal to secure a new mortgage rate several months before your existing deal ends.
When remortgaging to a new lender, you can usually arrange your new mortgage in advance, with completion planned to coincide with the end of your current deal.
For example, if your existing mortgage product ends in April, you could start reviewing your options in October, apply for a new mortgage and secure a rate ahead of time.
Your new mortgage would then normally complete when your existing deal ends, helping you avoid moving onto your current lender's Standard Variable Rate (SVR) or paying unnecessary early repayment charges.
The key is starting early enough to give yourself time to compare options, complete the application process and have everything ready for when your current deal finishes.
Mortgage offer validity periods and lender requirements vary.
Can I change my mind before my new mortgage rate starts?
Yes, in many cases, you can still change your mortgage rate before your new deal starts.
This means that if mortgage rates fall after you've secured your new deal, you may be able to switch to a lower rate before it takes effect.
And if rates increase? You've already secured your rate, so you're protected from those increases on the deal you've arranged, provided your mortgage offer remains valid and completes as agreed.
It's worth knowing that lenders have different rules and cut-off dates for making changes, so it's important to understand how much flexibility you have. Depending on the lender, changing rates may involve further checks or a revised offer.
The benefit of arranging your mortgage early is that you can secure a rate now, while potentially still benefiting if better rates become available before your new deal starts.
What happens if you don't arrange a new mortgage rate?
If your existing mortgage deal ends and you haven't arranged a replacement, you'll usually move onto your lender's reversion rate, often called its Standard Variable Rate (SVR).
This rate is set by your lender and can change over time, most of the time in line with the Bank of England base rate.
Depending on your current interest rate and your lender's SVR, your monthly mortgage payments could increase when your mortgage deal ends.
That's why knowing when your existing deal ends, and reviewing your options in advance, is important.
Is remortgaging always better than staying with your existing lender?
Not necessarily.
Although another lender might offer a lower interest rate, that doesn't automatically make remortgaging the most suitable option.
There are other things to consider, including:
Mortgage arrangement or product fees.
Legal and valuation costs (although many lenders have fee free remortgage deals)
Early repayment charges on your existing mortgage.
Your remaining mortgage term and repayment preferences.
Whether you require any additional borrowing.
Your future plans, including whether you intend to move house.
Sometimes a product transfer with your existing lender could be more appropriate. In other circumstances, moving to a different lender may offer benefits.
The key is understanding the overall costs and how each option fits your plans.
Three things to check before reviewing your mortgage
If your mortgage deal is approaching its end, start by finding out:
1. When does your current deal end?
Check the exact date your introductory or fixed rate finishes, rather than relying on when you originally took out the mortgage.
2. Are there any early repayment charges?
Some mortgages have charges for leaving the deal early. Understanding when these charges end can help you plan the timing of a remortgage.
3. Have your circumstances changed?
Changes to your income, employment, debts, property value or future plans could affect the mortgage options available to you.
Looking to remortgage in Gloucestershire?
At Hannah Miller Homes, we help homeowners understand their mortgage options, whether they're considering a new rate with their existing lender or exploring a remortgage with another lender.
Based in Gloucestershire, we support customers across Gloucester, Cheltenham, Stroud, the Cotswolds and throughout the UK.
If your mortgage deal is coming to an end in the next six months, it could be a good time to start the conversation – get in touch to review your options.
Bring your plans, I'll help with the rest.
Your home may be repossessed if you do not keep up repayments on your mortgage.