When your deal ends, or you want to borrow more, there are usually three routes: stay with your current lender, move to a new one, or keep your mortgage and borrow separately. This guide sets out what each one changes.
Three routes
Stay with your lender. A new deal with your current lender is called a product transfer. There's usually less paperwork, but you only see that lender's own deals. Many lenders don't ask for a new valuation or legal work. Some will also let you borrow more at the same time, subject to their own checks.
Switch to a new lender. A remortgage replaces your existing mortgage with one from a new lender. You can compare more deals, but it usually takes longer: a valuation, legal work and the new lender's affordability checks.
Keep your mortgage and borrow separately. A homeowner loan is a separate loan secured on your home, alongside your mortgage. Your current mortgage, and its rate, stays exactly as it is, but you make two payments each month: your mortgage, plus the loan.
The trade-offs
Each route changes something. A product transfer or a remortgage changes your mortgage. A homeowner loan adds a second loan with its own rate and term, and that rate may be higher than a mortgage rate. Whichever route you take, the borrowing is secured on your home. What matters is the total cost over the term: the rate, the fees and how long you borrow for, not only the monthly payment. A broker from our panel can explain which suits your circumstances.
What decides it
No route suits everyone. These questions usually settle it:
- When does your current deal end, and is there an early repayment charge before then?
- How does your current rate compare with the rates available now?
- Do you want to borrow more, and how much?
- How long do you want to borrow for?
- What fees apply on each route, and what is the total amount repayable?
Staying where you are can be the answer.
If you are thinking of consolidating
Any of the three routes can be used to pay off other borrowing, such as credit cards or loans. Consolidating is an option, not a requirement - an adviser will check whether it suits you. A lower monthly payment can still mean repaying more in total over a longer term. Our guide to consolidating borrowing covers this in more detail.
Questions people ask
Is staying with my lender always the cheaper option?
Not always. A product transfer can cost less to arrange, but another lender may offer a lower rate.
Can a broker arrange a deal with my current lender?
Often, yes. Many brokers can arrange a product transfer as well as a remortgage.