switching mortage?

picklekin

Hi,
Hope people will excuse the obvious question.
Our fixed rate 2 year mortgage deal ends shortly and I assumed we would shop about and find a new one, however they all seem to have (substantial) setting up charges on them and it led me to wonder a simple point, "is switching your mortgage a normal thing to do"? I'm so used to shopping about for ISAs and utility providers etc, but maybe its not the way with mortages.

Our new rate is actually cheaper, but not being on a fixed rate makes me and DH a little nervous, just wondered if I am worrying about nothing!

kingstreet

Your options are;-

- allow your mortgage to roll onto the follow-on rate

- ask your current lender about customer retention options

- remortgage to a new lender for a new product.

The latter two options could both include costs. Changing to a new product with your existing lender may see an arrangement fee payable, or added to the loan.

Remortgaging could see you paying a final, or deeds release fee, to your current lender, plus a valuation fee, arrangement fee and legal costs.

However, there are many deals where there are no transfer costs, other than the fee to your existing lender and you have to compare them to establish which is best for you.

As a rough rule of thumb, a lower mortgage amount would be best with a low/no fees, medium rate, while a higher mortgage is best suited to a low rate, higher fee approach. The term of the offer can also impact, as it's all about how long you need to save with that lower rate to repay the initial costs you had to shell out to move.

A broker can do this for you, but don't forget to research non-broker products/lenders too.