How to change mortgage lenders – Forbes Advisor UK


The mortgage currently financing your home may not be the best or most appropriate. Maybe you’re paying a much cheaper mortgage rate, for example, or want a fixed-rate loan to keep your monthly repayments consistent.

Alternatively, you might just need a more flexible mortgage to accommodate your changing personal circumstances.

However, to achieve any of these goals, it might be necessary to completely switch mortgage providers. If that’s what you’re planning, here’s what you need to know.

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How do I change mortgage lenders?

When you come to the end of a mortgage deal, you’ll switch to your lender’s expensive ‘standard variable rate’ (SVR), so this is usually when borrowers look to move offers.

The best new deal might be with the same lender, which is known as a “mortgage transfer.” But it can also be offered by a different lender – known as “remortgaging” – which involves a complete change.

The process – which can be done on your behalf at no cost by an independent mortgage broker – shouldn’t take more than a few months.

However, there are important milestones along the way that are worth knowing about first.

Check existing penalties

Check your current mortgage restrictions. If you’re only halfway through a deal — say, two years into a five-year contract — there are penalties for breaking the deal early.

It’s similar to the early termination fee with a TV package or mobile phone contract. In the case of mortgages, these are called prepayment charges (ERCs) and, usually set at between 1% and 5% of the mortgage outstanding, can easily run into the thousands of pounds.

This means that for many people, paying ERCs would reduce the benefits of switching.

It makes sense to wait until you’re close to the end of your existing agreement, in which case you can switch without penalty.

Give your finances a health check

Your finances will be subject to an affordability check and credit checks when you remortgage. The new lender will consider how you would react if mortgage rates were to rise.

Independent candidates are also likely to need two to three years of corporate accounts.

Before applying for credit, it is a good idea to check your credit file. Do this as soon as possible to give yourself time to improve your credit rating if necessary.

Estimate what you could borrow

Typically, you can borrow up to 4.5 times your salary – or your total household income if applying jointly. However, some lenders allow higher income earners to borrow more than that.

Spending habits and any unpaid debt will also be assessed and factored into your financial capability.

To get an idea of ​​the mortgage rates you can get, enter your criteria and numbers into our live mortgage tables (below) powered by online mortgage broker, Trussle.

The lower the value of your loan, the lower the mortgage rate. For example, a £300,000 property with an outstanding mortgage of £180,000 has an LTV of 60% and a landlord in this position could access some of the cheapest rates. Also consider arrangement fees and legal fees – although some offers offer the latter at no additional cost.

Use a mortgage broker

For a truly in-depth mortgage market research tailored to your personal situation, use a mortgage broker such as Trussle who researches all available lenders and does not charge the client a fee.

A broker is particularly useful for self-employed borrowers or anyone with less than perfect credit ratings.

Brokers can access more offers than appear in the comparison charts and learn more about each lender’s preferences when it comes to a client’s financial situation.

Different lenders apply different affordability criteria, so one may reject your application even if another accepts it.

Brokers handle the application process once you provide the necessary documents – such as photo ID, bank statements, payslips and proof of address.

Start the search early

If you’re on a standard variable rate, there shouldn’t be any penalties for switching, so get moving soon. If you’re nearing the end of an offer, you can still pre-purchase without penalty.

New mortgage offers are usually valid for between three and six months, which means you can strike a deal before the current offer ends.

The exact term varies from lender to lender, so check before applying.

Speak up if your situation changes

Your situation may change after applying for a mortgage or after accepting an offer. For example, your work income changes. This could affect your eligibility for the mortgage you want.

If this happens, let the new lender know. Keeping it to yourself could mean your mortgage offer will be withdrawn if the changes are taken into account.

The lender may change or withdraw the offer, but your broker may be able to help you with last-minute plan changes.

Latest tips and tricks

  • Contact a mortgage broker who can advise you on the merits of different offers, connect you with a provider and guide you through the application process
  • Be quick with paperwork and uploading documents
  • Check what your current lender offers. If it matches competing offers, staying with the same lender is faster and easier
  • Avoid big expenses and limit the use of credit cards before applying for a mortgage.

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