Can I Secure A New Mortgage Before My Old One Ends?
As your current mortgage deal approaches its end, you might be wondering if it’s possible to secure a new mortgage deal before your old one expires. The good news is that, yes, you can start exploring your options for a remortgage or product transfer up to six months before your existing mortgage deal ends. In this blog, I’ll guide you through the process of securing a new mortgage, whether you’re looking to remortgage with another lender or simply switch products with your current lender.
I’ll also explain the key differences between a remortgage and a product transfer, and how you can time the transition so that you avoid any early repayment charges (ERCs) when moving to a new deal. So without further ado, let’s get into it!
Securing a New Mortgage Deal Before Your Current One Ends
Typically, mortgages are structured with fixed-rate or variable-rate deals that last for a set period, usually 2, 3, or 5 years with some even going as high as 10 years! As your mortgage nears the end of this period, your lender will usually revert you to their Standard Variable Rate (SVR), which is often MUCH higher than the rate you were paying under your fixed deal. For example, high-street banks are usually set at around 7% or 8% whereas the average mortgage rate is about 4.5%. This is where taking action ahead of time can save you a lot of time and money.
Can You Secure a New Deal 6 Months Before Your Current Mortgage Expires?
Yes, many lenders allow you to start securing a new mortgage deal up to 6 months before your existing deal expires. This gives you the time to explore competitive mortgage rates and choose the deal that best fits your financial situation. There are two main ways you can secure a new mortgage: a remortgage or a product transfer.
Remortgage vs Product Transfer: What’s the Difference?
While both options involve securing a new deal, they work in different ways. Let’s break down the differences:
Remortgage
A remortgage involves switching your mortgage to a new lender or a completely new mortgage product with your current lender. It is an option that many homeowners choose if they want to take advantage of better rates or if they wish to move away from their current lender. When you remortgage, you essentially pay off your current mortgage with the new loan, which could be with a new lender or a different deal with your existing lender.
The benefits of remortgaging include:
- Potentially Lower Rates: Switching to a lender offering a better rate can significantly reduce your monthly payments.
- Access to New Mortgage Products: Remortgaging allows you to access different mortgage products that might not have been available when you first took out your mortgage.
- Flexibility: If your current lender’s terms are no longer suitable, a remortgage offers more flexibility in terms of the deal and structure.
Product Transfer
A product transfer, on the other hand, is when you switch to a new mortgage product with your current lender without moving to a different lender. Many lenders offer a range of products for existing customers, including competitive rates that you may be able to secure before your current deal expires. The process is often quicker and simpler than a full remortgage, as there is no need for a full application or credit check.
The benefits of a product transfer include:
- Less Hassle: Since you’re staying with your current lender, the process is more straightforward, often requiring less paperwork and fewer checks.
- Avoiding Fees: If you’re happy with your current lender, a product transfer allows you to avoid the potential fees and costs involved in switching lenders, such as arrangement fees or valuation fees.
How Long Can You Lock in a New Mortgage Deal?
A typical mortgage offer lasts for 3 months, which means you can secure a new deal up to 3 months in advance of your current mortgage deal ending. However, many lenders are willing to extend this offer for another 3 months, meaning you could lock in a deal up to 6 months before your existing mortgage deal expires.
This extended time frame ensures that your new mortgage deal will be in place when your current deal ends, without having to worry about early repayment charges (ERCs). By timing it right, you can seamlessly transition to a new deal that fits your needs and budget.
Avoiding Early Repayment Charges
When you take out a mortgage, most deals come with early repayment charges (ERCs) if you try to pay off your mortgage before the end of the deal. However, by securing a new mortgage before your old deal ends and timing the transition carefully, you can avoid these fees altogether.
To avoid ERCs, make sure that:
- Your new mortgage offer is in place before your current deal expires.
- You carefully time your remortgage or product transfer so that there is no overlap that could trigger ERCs.
- You speak with your lender or mortgage advisor to confirm the timing and avoid any penalties.
The Benefits of Securing a Mortgage Early
- Competitive Rates: Starting the process early gives you a wider range of mortgage options, allowing you to lock in competitive rates before market conditions change.
- More Time to Compare: You’ll have more time to shop around and compare different deals and lenders to find the best mortgage product for your situation.
- Avoiding the SVR: By securing a deal before your current mortgage expires, you won’t be stuck paying your lender’s Standard Variable Rate, which is often much higher than what you could be paying on a fixed-rate deal.
Why Work with Oportfolio Mortgages?
Our expert advisors at Oportfolio Mortgages can guide you through the process, ensuring you secure the right deal for your financial situation. Whether you’re looking to remortgage with a new lender or simply switch products with your current provider, we can help you avoid any potential pitfalls and ensure you don’t incur unnecessary costs. Get in touch with us today to explore your options and secure a new mortgage deal before your old one ends.
