When you consider jumping to a new lender for a cheaper rate, there are a few things you will need to think about to see if it truly is cost effective for you.

When can you switch your mortgage deal?

  • You can switch at any time, but be aware that your existing mortgage provider may charge you for doing so.

  • It is vital that you compare your current deal with any you might consider switching to - and look beyond the headline interest rate.

  • Be aware of one-off costs that may make switching more expensive for you overall.

What one off costs will you pay?

There are a number of costs you may need to pay, including:

  • Product fees: This is a one-off product fee, which will be a set charge or a percentage of the loan amount which is payable when you apply your mortgage application.

  • Legal fees: The legal fees will pay a solicitor to cover conveyancing, which includes arranging valuation surveys, arranging completion dates and the transfer of funds.

  • Valuation fees: You will also have to pay for a valuation of your property to be carried out before your potential new mortgage provider will approve your application.

  • Early repayment charge: If you pay off your mortgage early, which is effectively what you do when you switch to a new provider, then your mortgage provider may apply a penalty - usually referred to as an early repayment or redemption charge.

How do you find the right deal to switch to?

You need to follow these steps to work out whether you will benefit from switching:

Ask your current lender for a redemption quote

This document will explain how much it would cost for you to pay off your entire mortgage, including any fees can charges that may apply. You will need to be able to borrow this amount from a new provider before being able to switch.

Shop around for the best deals on the market

It always pays to shop around, and to make your search for a 'bargain' easier, think about your requirements:

  • Loan to Value (LTV): This is the amount you want to borrow against the value of your home. You will find more attractive deals the lower your LTV is.

  • Type of deal: There are several mortgage types available, such as fixed rate, trackers and discounted.

  • Interest rate: Obviously, this is one of the most important elements of your search as, a higher interest rate means higher monthly payments.

  • Extra costs: Check things like product fees - as a high product fee could wipe out any savings you would make by securing a lower interest rate.

Come up with a shortlist of possible deals

It is a good idea to select a number of 'possibles' based on the product features and eligibility criteria that matches your requirements, then work out the total cost over the course of the deal.

Start the application process

Once you have found a deal which will save you money, you can start your application online, over the phone, or in person, whichever is applicable.

If you are successful, the lender will make you an 'in principle' mortgage offer - this means your application has been approved, if the information you provided in your application is accurate.

Appoint a solicitor

At this stage, you will need to find a solicitor you trust to handle liaison with your current and proposed mortgage lender, as well as oversee the rest of the application process (conveyancing).

This will include:

  • Organising a valuation of your property

  • Carrying out the legal work required to transfer your mortgage (for instance the local searches and the transfer of title deeds) to a new lender

  • Transfer funds between your existing and new lenders to pay off your existing mortgage

  • Agree with the lenders a date for your new mortgage deal to commence

Are you ready to switch?

If you are still unsure, of simply need help working out whether it is cost effective to switch your mortgage mid-term, visit our mortgage specialist page to receive a quote and contact details from an independent mortgage advisor in your area.