Can I change my mind once I’ve reserved a new mortgage product?
Interest rate turblulence in the final months of 2022 led many to look to secure a new mortgage product. This known as a Rate Switch or Product Transfer if you’re sticking with the same lender, or a Remortgage if moving to a new lender, and the process can come with different strings attached, depending on the lender. We take a look at what you should bear in mind when switching mortgage deals.
What is the earliest I can secure a new rate with my current lender or new lender?
The majority of lenders will allow you to secure a new rate up to 6 months in advance, whether this is with your current lender or you are looking to remortgage. However some lenders will only allow existing customers to choose a new deal three months or even one month before their current deal ends.
If you are remortgaging to a new lender it’s always important to check how long the product you have chosen is valid for. In some cases, lenders put an end date in place by which the remortgage transaction must complete by in order for the rate to still be valid. If you fail to complete the remortgage by the cut off date then you will either have to secure a new rate which could be higher or you may have to pay an early repayment charge to your current lender to complete before your new offer expires.
Once I’ve secured a new rate, can I cancel it?
In most cases once you secure a rate you can cancel it without charge, however some lenders won’t allow you to cancel the rate you have secured once you have accepted it. This means that if a better rate becomes available, you won’t be able to cancel the product switch.
If the lender does allow you to cancel a product switch it’s always recommended to give at least 7 – 10 working days’ notice to the lender so they have time to cancel the switch going through.
The rules around this could be very costly, so it’s crucial to ask about cancellation rights before you commit to anything.
Should I secure a rate early?
The earlier you secure a rate the better chance you will have of getting the best rate available. This is because most lenders will let you switch to a better rate if one becomes available, whilst if rates increase after you secure your new product you’re safe in the knowledge you acted early.
For the majority of 2022 interest rates were on the rise therefore those who secured a new rate as early as 6 months prior to their current deal ending are likely to have got the best rate possible.
Using the services of a mortgage broker should mean that they will continue to track the market for you, right up until you’re due to complete on the remortgage or product transfer. So if your mortgage rate is due to end in 2023 get in touch with your adviser, or us here at Mortgage Medics, to discuss your options.
The best way to make sure that you get the right deal for you is to get a personalised recommendation from a qualified adviser, who can assess your individual needs and preferences and match you up with the right deal.
If this has got you thinking or worried, we’re here to help. Get in touch and we’ll talk you through your options, wherever you are in the UK. Or sign up to our monthly newsletter, to keep your finger on the pulse.
William Sproule – 4th January 2023