Mortgage Guides

Switching mortgages – Top 10 tips

By Hazel Cottrell hazel@consumerchoices.co.uk

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If you are considering switching mortgages, make sure you follow our top 10 tips to get the best deal… (Updated 9/9/09)

If your current mortgage is no longer competitive, then switching to a better mortgage deal can be a great idea.

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However, choosing a mortgage can be a tricky process and getting tied into an unsuitable mortgage could cost you hundreds if not thousands of pounds each year.

If you’re thinking about remortgaging, follow our top 10 tips to ensure you make an informed decision and don’t get caught out!

Give yourself time - Your house is probably the biggest purchase you’ve ever made and its likely that mortgage repayments account for of a large chunk of your outgoings, so it’s crucial that you do allow yourself time to find the best mortgage. Don’t just go for the first attractive offer you see and don’t be rushed into anything. When switching mortgages it’s important to take your time and look at all the options on the market.
Look into the future - When deciding on a type of mortgage, you will need to take a stance on where interest rates might go in the future. If you think they may stay low or fall then a tracker mortgage could prove to be a good deal, but if you think they are going to rise then fixing your rate while rates are low could be a better plan. For an outline of the different types of mortgage available, see our guide, mortgages explained.
Look at yourself – When switching mortgages, it’s essential to look for a mortgage that suits your own circumstances. You can calculate your potential monthly repayments with our mortgage calculator to assess affordability, but should also look at whether the mortgage has features that may suit you, for example an overpayment function.
Speak to your lender - When you are looking to remortgage, it’s definitely worth checking what your current mortgage provider can offer you. They may have competitive deals available to existing customers and if you switch to one of these you may be able to avoid paying extra fees and charges. However, it’s essential to compare any offers you receive with other mortgages on the market.
Read the KFI - When comparing mortgages, it’s useful to look at the Key Facts Illustration (KFI) of each product. This document sets out all the important features of a mortgage in a standardized format, so should make comparing deals easier.
Watch out for extra costs – When remortgaging it’s crucial to look at more than just interest rates. When calculating which deal is best for you, and indeed whether you would actually benefit from switching mortgages, you need to take into account the set-up fees of a new mortgage as well as any exit fees or redemption penalties your current lender may apply.
Look for flexibility - If you think you may be able to increase your monthly repayments in the future, you should look for a flexible mortgage that allows overpayments. Read our guide to overpayments to see how overpaying on your mortgage, even by a relatively small amount each month, can shave years off your mortgage and save you thousands of pounds in interest.
Study the small print – It may sound tedious, but reading the small print really can pay off. Once you think you have found a suitable mortgage, make sure you read through all the relevant documents before you sign on the dotted line.
Get some advice – If you are at all unsure on the type of mortgage that will suit you, or want to save some of the hassle of comparing mortgages yourself, you should definitely consider consult a mortgage broker or independent financial adviser (IFA).
Be prepared for the next switch - The cheapest mortgage deals usually only last for two or three years. If you choose a fixed-rate deal or a tracker deal that ends after a certain period, be sure to make a note of this date. After this period your interest rates are likely to increase, so when the end of the deal approaches you should start looking for a new mortgage again.