Remortgaging lets you move your existing home loan to a new rate or better terms either with your current or new lender.
In this article we explore the benefits of remortgaging with your current mortgage lender and whether you would be better off looking for a new deal with an alternative lender.
Remortgaging with the same lender - The Pros
- Remortgaging with the same lender may save you money
- It can save time as the current mortgage lender already has all of your details
- May be easier to get your remortgage approved
- Some lenders may not require an additional credit check as you have a proven track record
Remortgaging with the same lender - The Cons
- You may not get the best deal
- You may receive biased advice as the lender will want you to stick with them
Will I have to pay a fee if I remortgage with the same lender?
Remortgaging with your current mortgage lender is usually treated as a product transfer, which means you can avoid the need to arrange and pay for a valuation and the conveyancing process as the groundwork will have been done originally. Your existing mortgage lender will already have an idea of the value of your property from your original application so may just do its own quick 'drive-by' valuation.
Your existing mortgage lender won’t be as concerned about the value, unless there is a drastic change, as a product transfer isn’t treated as new lending and the property is already in the bank’s books. This should also save you time and money as there are no valuation or legal fees to pay. Similarly, there is often a redemption fee for settling a mortgage, but this won’t apply if you are remortgaging with the same lender.
Some mortgage lenders will waive their early repayment charges if you are sticking with them but moving before the end of a deal, meaning you can often change your product sooner than if you were switching somewhere new.
Do I need a solicitor to remortgage with the same lender?
As you are sticking with the same mortgage lender you will not need a solicitor as you are not purchasing a new property. Additionally, as you have borrowed with this lender already, they will not need the additional checks that would be required by a new lender.
Will I have to have a credit check if I remortgage with the same lender?
You will already have an existing relationship, which could make it easier to get your remortgage approved as your lender will already know that you can keep up with the repayments. Your existing lender should not require a credit check in order to remortgage with them. This can be especially beneficial if your credit score or financial circumstances have changed as it may be harder to pass affordability tests with a new lender.
How long does it take to remortgage with the same lender?
It can typically take around two months to get a remortgage approved as you need to go through mortgage interviews and wait for underwriters to consider your application. However, your current lender will already have most of your personal and property information so the actual remortgage process should be quicker and could happen in a matter of days.
Will I get the best deal remortgaging with the same lender?
Mortgage rates are still hovering around record lows and lenders regularly cut their pricing. Sticking with your current lender and not shopping around limits your choice as you will only be offered its own products. This could mean you miss out on better deals on the market.
If you stick with your current lender it is most likely that you will deal directly with the bank or building society and won’t be receiving any independent advice. In contrast, you could use a mortgage broker to access a wider range of products from different mortgage providers and get recommendations on the most suitable deal for you that you are most likely to be accepted for. This means you avoid wasting time on failed applications.
Remortgaging with a different lender - The Pros
- You will have the opportunity to get the best deal on the market
- There may be perks such as cashback or free legal fees because you're switching lender
- A thorough evaluation will be carried out on your property which could mean finding out you have a better LTV
Remortgaging with a different lender - The Cons
- It may be more time consuming as you have to start a new application
- Tighter controls were introduced in 2014 which could mean that you struggle to pass the stricter affordability tests
- Can be costly due to legal fees and potential early repayment charges
Do I need a valuation when remortgaging?
Remortgaging with a new lender is treated as a new mortgage application. A new lender will want to conduct a more thorough valuation of your property than your current one as they are adding a new risk to their loan book. This could help if your property is found to have increased in value, giving you more equity and helping you access a lower loan-to-value (LTV) mortgage, which is usually where the best rates are.
The downside of starting a whole new application with a different lender is that it is more time-consuming. You will need to have a mortgage interview and provide documents showing your income and expenditure. This may cause an issue if you haven’t borrowed since the introduction of the Mortgage Market Review in 2014, and your situation has changed, as lenders now conduct tough affordability assessments and stress tests to see if you can afford the loan. A new lender may also have stricter requirements than your current mortgage provider.
You need to be organised as it can take around two months to get a remortgage through. You will need to allow enough time to find the most suitable deal and complete the application before your current home loan moves to the more expensive standard variable rate (SVR).
A new application will also require valuation and legal conveyancing work, which will take time and you may need to pay fees for. Additionally, you may have to pay early repayment charges if leaving your current lender before the end of a deal and will also have to pay a redemption fee.
Ultimately, the decision on whether you should remortgage with your existing mortgage lender or with a new lender is down to you. As you come to the end of your current mortgage, your existing lender will start writing to offer you new deals and so if you haven't already, you should start considering your options at this point. It is important to shop around but there are a number of reasons why it may be worth considering sticking with your current mortgage provider, especially if you want to move your remortgage quickly and are worried about passing another bank or building society’s application process.
Moving to a new lender gives you access to a wider range of deals across the whole market which is important, especially when mortgage pricing is low. You may also get more flexibility and there is more incentive for a new lender to offer you a lower rate to attract you, as well as other perks such as cashback or free legal fees and valuations.
Your mortgage is likely to be one of your biggest expenses and so it is important to get your remortgage right, especially if you want to avoid moving onto the pricey SVR and not pay early repayment charges.
To see how much you can save, use this handy mortgage calculator, provided by online mortgage broker Habito. Alternatively, Habito could review your mortgage for free, comparing over 20,000 mortgages from over 90 lenders.
A mortgage adviser may also be handy if you are unsure of the most suitable rates for your financial situation and with Vouchedfor, you can request a free mortgage review with a 5* rated FCA regulated adviser.
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