When you’re buying a house, finding the right mortgage can be a major headache – especially if it’s taken you ages to find a house you like, and you just want to move in.
So it’s no surprise that some people end up taking whatever mortgage offer they can get, often on a fixed-rate deal lasting anywhere from one year to five years or more.
But once this expires, you’re typically left with a standard variable rate mortgage that might not even be close to competitive with the current market – knowing when to switch is crucial.
Are you locked in?
First of all, know the details of your existing mortgage. Are you still locked into a fixed-rate period that you’re not allowed to leave? Or is there an exit fee you will have to pay if you switch?
Sometimes you may be allowed to switch to a different mortgage from the same lender without incurring a fee, whereas you might be asked to pay to leave the lender completely and go elsewhere.
Are you in negative equity?
The housing market, like the economy as a whole, has been turbulent in recent years, and if the value of your property has dropped, you might be left unable to repay the outstanding mortgage when you sell your home.
Remortgaging in these circumstances can be challenging, as your effective loan to value rate could be over 100%, and mortgages at that level of LTV have disappeared from the market.
On the flipside, if house prices in your area have rocketed, it might be worth remortgaging at a lower LTV, as you could get a lower interest rate as a result.
When did you last remortgage?
If you’ve never remortgaged, it’s definitely worth considering it, even if you ultimately decide to stick with the loan you’ve got.
Think of it like switching energy supplier – until you compare the full market, you’ll never know if there’s a mortgage out there that suits your needs and could save you a lot of money.