Please read the guide to remortgaging your property
Yous hould review your mortgage every year when your lender must send you a statement. Make sure you also review your mortgage whenever the period of a special deal – for example, a fixed or discounted interest rate – comes to an end.
Your annual statement
Use your annual statement to check that your mortgage details are as you would expect them to be. The statement will include:
If you have a repayment mortgage, the balance shown on your statement should get smaller over the years. If you have an interest-only loan, the balance should stay the same, unless you choose to make some early capital repayment.
If you have an interest-only mortgage (or part of your loan is on that basis), the statement should either give details of any savings scheme you have taken out through the lender or warn you that you should have some arrangement in place for repaying the mortgage at the end of its term.
Check that it is on track to do this.
Are you getting a good deal?
If you move home, you’ll probably shop around to find a competitive mortgage. Even if you are not moving, there is no reason to stick with a poor deal.
Gone are the days when you took out a mortgage and kept the same one for 25 years. Nowadays, it’s common to shop around every few years to make sure you are getting a good deal.
Switching can cut your monthly payments. But you’ll need to weigh up these monthly savings or other benefits against the up-front costs of making the switch. The main factors to consider are set out below.
Make sure you recoup the costs of switching over a period which is less than any special deal – for example, over less than two years if you switch to a two-year discounted rate.
Which type of deal do you want?
Do you want a special interest rate deal or, say, a mortgage with flexible features?
Mortgage features
Do you want a repayment or an interest-only loan or a combination of both? You don’t have to stick with the same repayment method. If you are switching from an interest-only to a repayment mortgage, you do not have to stop or cash in any associated savings scheme.
Which repayment method?
Switching can be an opportunity to borrow extra money, especially if the value of your home has increased since you took out your existing mortgage. But don’t borrow more than you can afford to pay back. Don’t forget that you may be saving money now which means you can afford the new payment, but this payment could still go up in future unless you take a long-term fixed rate.
When switching your mortgage, this can also be a good opportunity to pay off some of your mortgage and borrow less.
How much can I afford?
What will it cost you?
Especially in the early years, your mortgage might have early repayment charges. These can be hefty if you are still in the period of a special deal, such as a fixed, discounted or cashback mortgage.
Even if there are no early repayment charges, your lender might make an administration charge and if you are switching to a new lender, your home will have to be valued and there will be legal costs to pay. With some mortgage deals, the lender will pay these fees for you.
Also, if you are switching lender, check whether they will charge you interest to the end of the month even if you pay off the mortgage earlier. In this case, make sure you switch your mortgage at the end of the month.
Remember that if a deal has no fees the rate might not be as good as one that charges fees.
