How does switching mortgage deals work?

Jimmy93

Hi all, new here - had a quick mortgage question which I couldn't really find the answer to anywhere online. Hoping those of you with more experience will just know off the top of your heads.

When you switch to a new product with your existing mortgage lender, how does it work? Do you have to jump through the same hoops as you did when getting the first mortgage or is it a case of clicking a button and having the new rate applied?

We're coming up to our first renewal and I noticed our lender has an option to select a new deal from within online banking. Just curious if you click it, sign something and then that's it or if you go back to square one?

vw100

If you switch to a new mortgage product with the same lender, you will not need to go through all hoops as you did when you took the mortgage out. The switch with the same lender will be simple as a click of the mouse and you will switch once the old product finishes or if you are on the standard variable rate it will switch immediately.

Jimmy93

Oh awesome, thanks. :beer:

mummylewis

If it's the same lender do they do another credit search?

Jimmy93

I have another question as well - if the value of the property has increased due to HPI, do they take that into account when switching or do you need a full paid revaluation to get the new figure?

Eg - if our house was worth 200k two years ago and the average value of the area has increased by 10% do they do the new deal based on 220, or is it still 200 unless we pay to have the revaluation?

Joy_mate

Hi Jimmy.
I had same situation in mid May this year.
I stayed with same lender, however I have done all home work for switching to others as well.
A. Staying with same lander:
- quick process, most lender will not charge legal and solicitors fees like you enroll for first time.
- of course they will do valuation of property (very quick). If you are satisfied than that's it done. If you are not satisfied with that valuation than some lender send valuation guy again for free. But not all so be ready to pay if you want second valuation.
- and credit search yes they will do because as you said ur property price is increased right!,,,,! So if you are taking out some equity (or not) than they will check ur affordability for sure, for present time. They don't know ur employment situation now!,, isn't it? So they will..sometime they do soft rather than hard credit check which won't reflect in your credit file.
B. Switching to another lender.
- you have to go through all process like first time you took out mortgage.
- however charges will depend on ur lender.
- yes credit check and full valuation will be happen again.(may or may not charge you)

I think...that's enough...

Joy_mate

Irrespective of what u have paid, lender will consider current price of ur home. Which is £220 in ur example. So you are in profit with having some equity.

Jimmy93

Ok great, thanks - most helpful!