Your mortgage is likely your biggest financial commitment, but that doesn’t mean you have to be stuck with the same deal forever. Many homeowners could be paying more than they need to by staying on their lender’s standard variable rate (SVR) or not reviewing their mortgage regularly.
If you’re wondering whether switching your mortgage could save you money, here’s what you need to know.
Why Switch Your Mortgage?
Mortgage rates change over time, and new deals become available. If you’re on a fixed-rate deal that’s about to end or already on your lender’s standard variable rate, you might be paying more interest than necessary. Here are some key reasons to consider switching:
- Lower Interest Rates – Mortgage rates fluctuate, and a lower rate could significantly reduce your monthly payments.
- Avoiding the Standard Variable Rate (SVR) – When your fixed, tracker, or discount mortgage ends, you’ll usually move to your lender’s SVR, which is often higher than other available deals.
- Releasing Equity – If your home has increased in value, you may be able to release equity for home improvements, debt consolidation, or other financial goals.
- Shortening or Extending the Mortgage Term – You might want to shorten your term to pay off your mortgage sooner or extend it to reduce your monthly payments.
- More Flexible Features – New mortgage products may offer better overpayment options, payment holidays, or offset facilities.
When Can You Switch?
You can typically switch your mortgage at the end of your current deal without incurring early repayment charges (ERCs). However, some homeowners choose to remortgage before their deal ends if the savings outweigh any penalties.
Consider switching if:
- Your fixed, tracker, or discount rate is ending soon.
- You’re on an SVR and paying a higher rate than necessary.
- A new deal offers significant savings even after considering fees.
- You need to borrow more for home improvements or debt consolidation.
How Much Could You Save?
The amount you can save depends on several factors, including your outstanding mortgage balance, current interest rate, and the new deal available to you. Here’s a simplified example:
- Current Mortgage: £200,000 balance at 5% interest, 20 years remaining
- Monthly Repayment: £1,320
- New Mortgage Rate: 4%
- New Monthly Repayment: £1,210
That’s a saving of £110 per month or £1,320 per year. Over the full term, this could add up to thousands in interest savings.
What Costs Are Involved?
While switching your mortgage can save you money, there are some potential costs to factor in:
- Early Repayment Charges (ERCs) – If you switch before your current deal ends, you may face a penalty.
- Exit Fees – Some lenders charge a small fee to close your mortgage account.
- Arrangement Fees – New mortgage deals may come with product fees, though some fee-free options are available.
- Valuation and Legal Fees – Many lenders offer free valuations and legal work as part of a remortgage deal.
How to Switch Your Mortgage in 5 Steps
- Check Your Current Deal – Find out when your current mortgage deal ends and if any early repayment charges apply.
- Assess Your Needs – Do you want a lower monthly payment, a shorter term, or to borrow more?
- Compare Mortgage Deals – Speak to a whole-of-market mortgage broker like HLC Mortgages to find the best available rates.
- Apply for the New Mortgage – Once you’ve chosen a deal, your broker will help with the application process.
- Complete the Switch – Your new lender will handle the legal side, and once approved, your new mortgage will replace the old one.
Should You Use a Mortgage Broker?
A mortgage broker can save you time and money by finding the best deal tailored to your needs. At HLC Mortgages, we search the whole market to ensure you get the most competitive rate. We also handle the paperwork and guide you through the process, making switching your mortgage hassle-free.
Final Thoughts
Switching your mortgage can be one of the easiest ways to reduce your monthly outgoings and save money in the long run. If your current deal is ending or you’re paying more than necessary, now is the time to explore your options.
At HLC Mortgages, we help homeowners find the right mortgage deal for their needs. Get in touch today to see how much you could save.
Ready to save on your mortgage? Contact HLC Mortgages for expert advice and a free mortgage review.