Although it costs money to switch your home loan, the savings you make by getting a better deal or the security you get by swapping for better terms and conditions usually mean it is well worth the effort.
How to compare and switch
1. Read your existing paperwork or call your lender to find out how much you are paying each month, whether there are any penalties for leaving, and ask if it can offer a better deal.
2. Compare mortgages with other lenders. Don't increase the remaining length of your mortgage or you could end up paying thousands of pounds extra in interest and costs.
3. When you've found the best mortgage for you, add up the fees, legal charges, valuation costs and all the monthly payments for the length of the entire deal. Then add the penalties for leaving your previous deal, if any. Now add up your repayments on your existing mortgage over the same period of time and compare the two figures, the lower being the cheapest.
4. Cost isn't everything. Better terms and conditions, such as a fixed interest rate for a long period of time, could be worth paying more for. Five- to 10-year fixed rates are currently at historically extremely cheap prices of 3.5 per cent to 6 per cent. If you can lock that in, it's a good option if you’re worried about interest rates – and your mortgage repayments – rising over the next few years
5. The valuation and legal process can take one to two months before the deal goes ahead.
Top deals available today
There are many types of mortgage but lenders usually compete with bog-standard fixed or variable deals, which means you can expect that these are usually the best-priced mortgages.
With variable deals it is better to go for a tracker if possible, because discounted variable deals can be increased by the lender at a whim, along with its standard variable rate.
Here are the top fixed and tracker remortgage deals currently on offer for someone with a £100,000 mortgage with 23 years remaining:
Chelsea Building Society has a five-year fix costing an average of £6,400 per year including monthly payments, fees and legal costs. Remember to add on any penalties or fees you need to pay for leaving your old mortgage.
This calculation is based on a 3.29 per cent interest rate for five years with about £1,500 in mortgage fees. The product is for customers looking for a mortgage up to 70 per cent of the property’s value, also known as 70 per cent loan-to-value or LTV.
Yorkshire Building Society offers excellently priced five-year fixes for customers requiring an LTV as high as 85 or even 90 per cent. Both building societies offer extremely cheap ten-year fixes too.
Nationwide Building Society has a three-year fix costing an average of £6,100 per year, including fees and costs. This is another 70 per cent LTV mortgage, charging 2.89 per cent per year with around £1,000 in mortgage fees. Yorkshire Building Society has a similar loan as do Santander.
HSBC has a 70 per cent LTV tracker lasting the whole mortgage but unusually it carries no penalties for leaving at any time. This deal is currently just about the cheapest tracker regardless of how long the loan runs for.
Over three years, for example, it beats other tracker mortgages, costing an average £5,900 per year. The interest rate starts at 2.59 per cent and the total fees are around £400.
Yorkshire, Chelsea, RBS and Leeds compete well with HSBC over two years with their own cheap trackers.
You can see more details and request help in finding the best deal for you on our mortgages page, where you can also find information on mortgages with higher or lower LTVs.
*All deals mentioned were correct at time of publication
