In certain scenarios, the costs associated with obtaining a new mortgage deal and potential early repayment penalties may not be justifiable. However, there are circumstances where it might be beneficial to let your mortgage default to the lender's Standard Variable Rate (SVR). For instance, if you plan to relocate soon and can't transfer your mortgage to a new property, or if you are close to finishing your mortgage payments.
If you wish to release equity from your property, you must undergo the remortgaging process for the lender to determine whether to extend your loan. Opting for a fixed-rate deal provides payment stability throughout the term, which can be advantageous if interest rates rise.
It is advisable to avoid the lender's SVR as it is typically the most costly option and can fluctuate at the lender's discretion. To secure competitive rates, consider switching directly from one deal to another, as fixed-rate or tracker mortgages usually offer the best deals.
Remortgaging should be done when moving to a different lender, but the term can also refer to shifting to a different deal with the same lender (known as a "product transfer"). The remortgaging process involves finding a new mortgage deal when the fixed rate expires. To secure the best rate for your mortgage, it's essential to start the process early, possibly six months before your current deal ends.
Key steps in the remortgaging process include researching deals, obtaining a closing balance statement from your lender, choosing a new mortgage, employing a solicitor for the legal aspects, undergoing affordability checks, obtaining a mortgage valuation, receiving a mortgage offer, and finalizing the switch to the new deal.
When seeking the best mortgage rates, consider increasing your equity, exploring offset mortgages if you have significant savings, and evaluating interest-only mortgage options cautiously. Ultimately, make well-informed decisions about fixed-rate versus variable-rate mortgages based on your financial circumstances and market conditions.