From Panic To Prepared Your Guide To Successfully Switch Your Mortgage
By Taylor Brown
27th June 2023

In a financial landscape marked by rising interest rates, the prospect of coming off a fixed-rate mortgage deal is worrying so many people now. If you're among those facing this situation in the coming months, you might be feeling a sense of unease.

But worry not. We’re here to help you prepare you to switch your mortgage (a process also known as remortgaging). We'll guide you through the steps you need to take, from understanding your current mortgage to preparing your documents and seeking professional advice. Our aim is to equip you with the knowledge and tools you need to navigate this process with confidence. So, let's start on this journey to help you successfully change you mortgage and reduce the impact of rising costs.

Understanding Your Current Mortgage

A lot of people who come to see us and are unsure of the details of their current mortgage. While you can change your mortgage at any time, doing so without understanding your current mortgage could lead to penalties, often called ERC’s or Early Repayment Charges. Conversely if you leave it to late you risk moving onto your lenders default rate, or SVR (Standard Variable Rate) which could mean your monthly payments are much higher than they need to be when compared to other deals on the market.

So, what do you need to know to successfully change your mortgage? The first step in preparing to switch your mortgage is to fully understand your current mortgage. This involves more than just knowing your monthly payment. It requires a deep dive into the details of your mortgage agreement..

Start by reviewing your latest mortgage statement. This document is a treasure trove of information that can help you make informed decisions about your next steps. It will tell you -

  • How much you still owe on your mortgage
  • The Interest Rate you're currently paying
  • Any penalties you might incur for early payment (ERC's)

One of the most crucial details to note is the end date of your current deal, especially if there are ERC’s. This is the date when your fixed or discounted rate ends, and you'll likely move onto your lender's Standard Variable Rate (SVR), which can often be significantly higher than your current rate. Knowing this date gives you a timeline for when you need to start considering your remortgage options.

What documents do you need to switch mortgage?

If you’re looking at getting the best deal available to you then it’s likely that you will need to look at all lenders and not just your current lender.

What happens when you change your mortgage? Well, if you do nothing, you will probably move onto your lender's Standard Variable Rate (SVR), which can often be significantly higher than your current rate. When switching lenders its essentially the same process as if you were taking out a new mortgage with a full mortgage application needed and documents to support it.

In the current climate, where lenders are known to withdraw their products at short notice, having all your documents ready is more important than ever. This not only speeds up the process but also ensures you're able to secure a new mortgage deal at the right time. The main documents you'll need include -

  • Bank Statements - At least three months (but we suggest four months) - These give lenders an overview off your income and outgoings
  • Payslips - Your latest 3 months - These serve as proof of your income 
  • Accounts and tax returns & calculations - If you're self-employed, these documents are crucial to demonstrate your earnings

Having these documents at your fingertips can make the difference between securing a new mortgage deal in time and potentially having to deal with higher repayments on your lender's Standard Variable Rate (SVR). So, gather your documents and be prepared to act swiftly.

When is the Best Time to Look at Switching Your Mortgage?

Firstly, is switching your mortgage a good idea? Absolutely, especially if you start the process at the right time. Ideally, the optimal timing for considering a mortgage switch is around seven months before your current deal ends. This might seem early, but there's a good reason for it. Most lenders allow you to secure a deal up to six months in advance. This means you can agree on a new mortgage deal half a year before your current one ends.

Starting the process early has several benefits. Firstly, it allows you to avoid a potentially higher Standard Variable Rate (SVR) that you might be moved onto when your current deal ends. Secondly, it ensures a smooth transition from one mortgage deal to another, avoiding a period of uncertainty or financial strain.

But how do you navigate this process? This is where speaking to an adviser becomes crucial. An adviser can provide a clearer understanding of the remortgage process and offer expert insights into the market. They can guide you through the different deals available and help you find one that best suits your circumstances.

Remember, the goal is not just to switch your mortgage, but to switch to a deal that puts you in a better financial position. And speaking to an adviser is a crucial step in achieving that goal.

Facing an Increase in Monthly Payments - What Can You Do?

In the current financial climate, many homeowners in the UK are bracing themselves for a potential increase in their monthly mortgage payments. This is primarily due to the Bank of England raising interest rates to tackle inflation and impacting people as they roll off their fixed-rate mortgages. If you're one of these homeowners, you might be wondering: what can you do to mitigate this increase?

Firstly, it's important to understand why your payments might increase. The main reason is the end of your fixed-rate deal, which could see you moved onto your lender's Standard Variable Rate (SVR). With interest rates on the rise, the SVR is likely to be significantly higher than your current rate.

However, there are options available to help you manage this potential increase. One of the most effective strategies is to shop around for a better deal. Don't feel like you have to stick with your current lender - there are many other lenders out there who might be able to offer you a more competitive rate.

Is it better to remortgage (also known as a product switch) with your existing lender? Not necessarily. Don't feel obliged to stick with your current lender - there are many other lenders out there who might be able to offer you a more competitive rate.

This is where speaking to a mortgage adviser can be invaluable. An adviser can provide a clearer understanding of the remortgage process and offer expert insights into the market. They can guide you through the different deals available and help you find one that best suits your circumstances. They can also help you explore other options to mitigate the potential increase in your monthly payments, such as extending the term of your mortgage or switching to an interest-only mortgage.

Remember, the goal is not just to switch your mortgage, but to switch to a deal that puts you in a better financial position. And speaking to an adviser is a crucial step in achieving that goal.

Taking Control of Your Mortgage Switch - The Power of Knowledge and Preparation

In the current financial climate, staying informed and prepared is more important than ever. With interest rates on the rise and a significant number of homeowners coming off fixed-rate deals, many are facing the prospect of increased monthly payments. But knowledge is power, and understanding your options can help you navigate this challenging landscape.

Firstly, remember that you're not alone in this. Many homeowners are in the same boat, and there are resources and professionals available to help. Speaking to a mortgage adviser can provide you with expert insights and guidance tailored to your specific circumstances.

Secondly, don't be afraid to shop around. Sticking with your current lender might seem like the easiest option, but it may not be the most financially beneficial one. There are many lenders out there, and you might find a better deal by switching.

Finally, remember that preparation is key. Understanding your current mortgage, having your documents ready, and starting the remortgage process in good time can help you avoid potential financial pitfalls.

In conclusion, while the prospect of coming off a fixed-rate deal in the current climate can be daunting, it's important to remember that there are options available. By staying informed, seeking professional advice, and being proactive in your preparations, you can confidently manage the process of switching your mortgage with confidence.

Your home may be repossessed if you do not keep up repayments on your mortgage. You may have to pay an early repayment charge to your existing lender if you remortgage.

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