How to Get the Best Rate when Renewing your Mortgage Deal
When it comes time to remortgage, many homeowners simply stay with their existing lender without shopping around. While this may seem like the easy option, research shows that borrowers who switch lenders when remortgaging can often secure a much better deal.
In this article, we'll look at some key reasons why staying put with your current mortgage provider could mean you lose out.
Reason 1 - Your Current Lender May Not Offer the Most Competitive Rates
A common mistake is to presume that your existing lender will offer you the best or lowest interest rates when you remortgage [1]. However, lenders frequently reserve their most competitive rates for new customers as an incentive to switch. This means if you automatically renew with the same provider, you could be paying more interest than is necessary [2].
For example, research from Moneyfacts shows that in Q3 2022, remortgaging borrowers who stayed with their existing lender paid 0.33% more interest on average compared to those who switched [3]. While 0.33% may not sound like much, it can add thousands to your overall mortgage costs. So shopping around is key to securing the lowest rate.
Reason 2 - You May Miss Out on Better Mortgage Features Elsewhere
As well as lower interest rates, remortgaging also gives you an opportunity to switch to a different type of mortgage better suited to your needs [4]. Your current lender may not offer the specific features or flexibility you want.
For instance, new lenders entering the market frequently introduce innovative products. Incumbents often take time to catch up. So if you want a mortgage with unique characteristics like offset accounts, overpayments options, or free porting, looking wider could provide better choice.
Equally, alternative lenders may provide other advantages your existing provider lacks. For example, access to exclusive deals, better customer service, online account management, loyalty rewards, or extra borrowing options [5].