How Early Can I Switch My Mortgage – 5 tips to get a better deal

13-September-2022 15:09
in Private clients
by Jennifer Stevenson
How Early Can I Switch My Mortgage – 5 tips to get a better deal | Product Switching v Remortgaging | Compare Mortgage Product Switch Times

Existing UK borrowers can now lock in mortgage deals up to 6 months in advance as interest rates rise.

After the base rate hit 1.75% in August, many homeowners are looking to get a new mortgage earlier than usual, hoping to switch to a cheaper deal and avoid future rate hikes.

Under the old rules, high street lenders typically allowed mortgage borrowers 3 months before their renewal date without incurring early redemption penalties (ERCs). The good news is that several lenders have extended this period, e.g. if you have a current mortgage with HSBC, you can reserve or switch to a new deal up to 120 days before your renewal date.

Mortgage rate switch windows typically last between three and four months, although some lenders provide six-month windows.

Due to inflation, interest rate increases, and other factors, consumers are being encouraged to lock in deals earlier.

Remortgage vs Product Transfer – What are the differences?

When your mortgage deal is coming to an end, you will either need to:

  • Remortgage - Switch to a new lender product or do a
  • Product Transfer – where you stay with your current lender by doing a transfer onto a new mortgage product.

Is it a good idea to start early to switch my mortgage?

The end of ultra-low mortgage deals means many homeowners are facing a switch to significantly more expensive rates.

1 year ago you could get a 2 year fixed rate mortgage under 1%.

The cheapest 2 year, 5 year, and 10 year fixed rates are now 3.25%, 3.35%, and 3.65%, respectively at the time of writing- and interest rates are widely expected to rise.

As a result, many homeowners are starting the mortgage-switching process earlier than usual to secure today's interest rate, fearful that interest rates might be even higher if they delay taking action.

Is your mortgage about to end? Find the best new deal with these 5 tips

5 recommended tips for every mortgage holder:

  • Find out what the details of your current mortgage are.  What's the interest rate, what's the monthly repayment, what's the outstanding balance, what is the loan-to-value, etc. Contact your mortgage lender if you cannot locate your paperwork.
  • Look at the current deals (product transfer options) offered by your current mortgage lender.  Although your lender may not have the best deals on the wider market, it's a good benchmark because existing lenders can skip affordability checks if you're not borrowing more - and there's likely to be less paperwork and fewer fees. This might be a good option if you have trouble being accepted for a remortgage with a new lender.
  • Search the market for the best deals.  Use our Mortgage calculator best Buy tool (via our sister mortgage site in two minutes to get an overview of interest rates and deals. Remortgaging gives you a greater choice of products and lenders than product transfers.
  • Compare what you've found and what you're currently getting.  If you're already on an expensive, standard variable rate, you might find the new deals help you save significantly. With the help of our Mortgage calculator, you can calculate how much you could save.
  • To increase the chances of acceptance, use a mortgage broker.  Credit and affordability checks are done by lenders, which can derail applications. Choosing a provider and knowing how much you can borrow can be challenging. An experienced mortgage broker can assist you with these concerns. In addition, a broker can assist you in deciding whether to remortgage or transfer your product.