Can you change mortgage product if the interest rate improves when you've got the ball rolling?

jen_79

My fixed rate is coming to an end at exactly the wrong time it seems, it ends in August and the lender offered their rates last week. I thought I could get a better deal so went searching.

I've shopped around and Nationwide seems to be the best for me, though frustratingly the rate has risen 0.15% in the last few days while I was waiting for their earliest advisor appointment.

I understand this is because of the BOE base rate change and that lenders often change their rates a few times over the coming weeks as they figure out what's going on.

So even though I don't need the remortgage to go through until 1 September 2022, let's say I agree to 2.54% today and they change it back to 2.39% next month, am I out of luck? Can I ask them to use the new rate? Do I have to start all over again? Obviously if it goes up further I'll keep my mouth shut!

K_S

@jen_79 Generally speaking, with most mainstream lenders you can indeed switch products post-offer if rates go down, without too much hassle.

This is for the benefit of others who may come across this thread - most remortgage offers are valid for 6 months, so with a 31 Aug fix-end date, you could have 'secured' a rate back in March (or even earlier with a couple of lenders like Nationwide allow 'reserving' of a product for 90 days, followed by a 6 month offer validity).

Finally, when you want to secure a rate asap, it may be worth opting for a broker to get an application in asap rather than a direct application which may involve waiting for an appointment. Plenty of brokers won't charge a fee for remortgages and there are plenty of fee-free brokers listed in the MSE guidance here

https://www.moneysavingexpert.com/mortgages/best-mortgages-cashback/#step3

jen_79

Thank you so much K_S! It's my first time remortgaging so I wasn't aware of the 6 months aspect.

I did ask my broker to see what they could offer and it was the exact same product Nationwide offered me so I thought I may as well proceed myself and save the broker fee - unbeknownst to me they would have waived their fee, which I wish I knew. I imagine Nationwide would have paid them something so we both could have benefitted but I didn't know.

Funnily enough the Nationwide adviser said they would reserve it for me but only for a few days, otherwise if it changed again next week, I'd lose out. Nice to know Nationwide don't even follow their own policies.

Thrugelmir

jen_79 said:

Funnily enough the Nationwide adviser said they would reserve it for me but only for a few days, otherwise if it changed again next week, I'd lose out. Nice to know Nationwide don't even follow their own policies.

There's only a finite amount of money allocated to a given product. In certain circumstances it's a question of use it or lose it. The cost of money is changing very suddenly. The NW will be pricing this in. 

K_S

jen_79 said:

Thank you so much K_S! It's my first time remortgaging so I wasn't aware of the 6 months aspect.

I did ask my broker to see what they could offer and it was the exact same product Nationwide offered me so I thought I may as well proceed myself and save the broker fee - unbeknownst to me they would have waived their fee, which I wish I knew. I imagine Nationwide would have paid them something so we both could have benefitted but I didn't know.

Funnily enough the Nationwide adviser said they would reserve it for me but only for a few days, otherwise if it changed again next week, I'd lose out. Nice to know Nationwide don't even follow their own policies.

@jen_79 With the vast majority of brokers, irrespective of whether they charge a fee or not, the main income is from the "procuration-fee" that the lender pays to the broker upon completion. It's usually around 0.3-0.4% of the loan size, has no impact on the rate that the client gets and is always disclosed in the illustration/KFI that the broker sends the client. Mind you, the broker typically doesn't get the whole amount mentioned on there as there are often other firms in the middle (mortgage club, network, etc.) who take a cut before passing it on.

The Nationwide adviser might well be right, I'm not sure if the 90 day reservation is available direct. But it definitely is available through brokers and something that I've used a lot more than usual over the past couple of months https://www.nationwide-intermediary.co.uk/products/reserving-a-product#:~:text=If an offer is issued,range available at that time.

jen_79

Thank you, I'll try and remember this for next time. It would have cost me nothing extra and given them something so it's a shame they offered it after I'd gone ahead myself, oh well!

simon_or

jen_79 said:

Thank you, I'll try and remember this for next time. It would have cost me nothing extra and given them something so it's a shame they offered it after I'd gone ahead myself, oh well!

Tbf it's partly the broker's fault. A good one would have contacted you 6-7 months before end of your fixed rate and discussed your options. At least that's been my experience.

You would have got a much better rate and he would have retained your business.