Do people generally remortgage to same or different providers?

Dave360180

We are near the end of our fix and looking at remortgaging soon.

Has anyone looked at all whether remortgaging to a new lender offering a slightly better rate is generally worth it, given the setup/product fees are quite high ?

i know every case is different but, assuming no exit fees, a £250k mortgage, a five year fix, a £1500 product fee (which seems to be standard), legal fees of £500 and a rate saving of say 0.1% then the savings over the term come out at approx £250.

If the rate saving is 0.2% then it’s more worthwhile but that might not be possible. Also i suppose you could use a cashback broker. 

What do others generally do, please ?

[Deleted User]

If you're remortgaging, it's always to a new lender. Staying with your current provider is just a product switch.

Generally you'll be better off financially by remortgaging.

Emmia

I think whether you want to switch or not will depend on the rates / offers available from your current lender vs. a new lender.

Sticking with the same lender will cut down on the amount of paperwork etc., you need to provide as part of the application though.

Dave360180

Thanks for the replies.

Deleted_User said:

Generally you'll be better off financially by remortgaging.

Are you sure ? I’ve found that generally you may be worse off after fees based on some reasonable assumptions. 

Emmia said:

I think whether you want to switch or not will depend on the rates / offers available from your current lender vs. a new lender.

Looking at Best Buy tables the rates are all around 0.1% of each other. As interest rates are quite low at the moment. Are current lenders offers usually competitive?

Would be interested in others findings. Is there some trend / rule of thumb ? Eg “don’t bother switching for a saving less than £X” or “quite often it’s not worth switching given product fees”.

Emmia

Dave360180 said:

Thanks for the replies.

Deleted_User said:

Generally you'll be better off financially by remortgaging.

Are you sure ? I’ve found that generally you may be worse off after fees based on some reasonable assumptions. 

Emmia said:

I think whether you want to switch or not will depend on the rates / offers available from your current lender vs. a new lender.

Looking at Best Buy tables the rates are all around 0.1% of each other. As interest rates are quite low at the moment. Are current lenders offers usually competitive?

Would be interested in others findings. Is there some trend / rule of thumb ? Eg “don’t bother switching for a saving less than £X” or “quite often it’s not worth switching given product fees”.

We've remortgaged twice at the end of fixed terms, our mortgage is with HSBC and both times after looking around we decided to stick with them, as their offer was competitive - the lack of paperwork hassle and ease of doing it all online was probably the deciding factor, since as you note rates and product fees are all fairly similar. 

Dave360180

Thanks Emmia, very useful. Sounds like there Generally isn’t a pot of gold at the end of a remortgage.

Did you get charged a product fee for sticking with HSBC, if I may ask ?

Emmia

Dave360180 said:

Thanks Emmia, very useful. Sounds like there Generally isn’t a pot of gold at the end of a remortgage.

Did you get charged a product fee for sticking with HSBC, if I may ask ?

I think we did - but I seem to remember that overall paying the fee upfront (not adding it to the mortgage) worked out as giving us a cheaper overall deal on the 3 year fixed term we opted for. 

Dave360180

Thanks. I was under the impression that lenders waive product fees if you stick with them? 

getmore4less

Dave360180 said:

We are near the end of our fix and looking at remortgaging soon.

Has anyone looked at all whether remortgaging to a new lender offering a slightly better rate is generally worth it, given the setup/product fees are quite high ?

i know every case is different but, assuming no exit fees, a £250k mortgage, a five year fix, a £1500 product fee (which seems to be standard), legal fees of £500 and a rate saving of say 0.1% then the savings over the term come out at approx £250.

If the rate saving is 0.2% then it’s more worthwhile but that might not be possible. Also i suppose you could use a cashback broker. 

What do others generally do, please ?

You need to know the payment to know the saving over 5 years. 
0.1% lower on £250k over 5 years need costs below £1,250 on an interest only basis.

Repayment will be lower. 

Emmia

Dave360180 said:

Thanks. I was under the impression that lenders waive product fees if you stick with them? 

That may depend on the lender and the deal offered - it's the overall cost that is key. HSBC for example has 5 year fixes (90% LTV) with and without a fee, but the interest rates on the "fee free" product for the fixed period are higher 

Fee free is 2.79% 
Or £999 fee gets you 2.59%

If the difference in percentage saves you £200+ per year in the fixed period (in this scenario) then you are better off paying the fee.

Thrugelmir

There'll be a mortgage exit fee (as opposed to an ERC) along with a valuation fee to be factored into your calculations. Unless the new lender has an offer of some kind.
As the mortgage balance reduces then finding a better deal elsewhere becomes increasingly difficult eventually becoming economically unviable. 
There's no one size fits all answer. Though the higher the mortgage balance at the outset the easier it is to absorb a high fixed product fee.