A guide to switching your mortgage deal

When should I switch my mortgage deal?

When your current deal ends

If you’ve taken out a discount or fixed rate mortgage deal, there’s likely to be an initial rate, lasting around two years on average. After this time, your rate will change, usually to your lender’s standard variable rate.

It's important to consider all options before switching to a new deal to ensure you select the right deal for you.

During your current deal

The most common time to switch is when your current mortgage deal is coming to an end, although many providers will allow you to move mid-deal too.

For example, if you have a tracker mortgage, you may be able to switch to a fixed mortgage before the end of the deal without paying early repayment charges. If your circumstances have changed and you need to budget carefully, a fixed rate mortgage will give you the benefit of knowing what you’ll pay each month.

On the other hand, you may want to move from a fixed rate to a variable rate or tracker mortgage. However, your monthly mortgage payments may change in the event of interest rates increasing.

Don't forget the fees

Remember that a mortgage is not just about the interest rate figure. If you’re thinking of switching your mortgage deal, you should also take into account the fees and charges you might incur when choosing a new deal. Depending on the lender and the deal, these fees may be waived but it’s best to do your calculations first before making the switch. Here are some of the things you need to bear in mind when deciding to switch or not:

Booking fee

This is the charge a bank or building society may put on a product to secure the interest rate of a mortgage. This is sometimes referred to as the application fee.

Valuation fee

The mortgage lender will assess the value of the property to establish any changes in the price of the property. According to its value, this can be anywhere from £150 up to £1,500.  Again, this fee may be changed depending on the lender and product.

Early repayment charges

If you come out of your current mortgage deal before it ends, you may have to pay an early repayment charge which, in most cases, is a percentage of the loan.

Completion fee

This fee is charged to set up your mortgage and can also be referred to as an arrangement fee. It usually costs from £500 to over £1,000 with the option of either paying it upfront or adding it to the mortgage. If you add the fee to your mortgage, you’ll pay interest on it over your mortgage term. This will increase the total amount you’ll pay over your mortgage term. Again, we sometimes have offers where this fee is not charged.

Speak to your mortgage adviser

We realise that making your mind up about switching is a big decision, which is why it’s always a good idea to speak to a mortgage adviser before doing so. They will help you look at your various options, especially if your existing mortgage deal is coming to an end. You can find further information about how we can help by going to our 'Switch to a new mortgage deal' page.