Whether it is better to stay with your current lender or switch depends on your interest rate, fees, circumstances, and eligibility at the time. Staying with the same lender can be simpler, while switching lenders may provide access to different rates or mortgage features. Reviewing both options before a deal ends helps borrowers understand what is available.
When a mortgage deal approaches its end, many UK homeowners find themselves asking this question. Because most mortgages are arranged on fixed or tracker rates for a set period, reviewing your options is a normal part of home ownership. Understanding how staying with your current lender compares to switching can help you make sense of the choices available, without assuming one route is always better than the other.
What Does Staying With Your Current Lender Mean?
Staying with your current lender usually involves a “product transfer”. This is where you move from your existing mortgage deal onto a new rate offered by the same lender, without changing the mortgage balance, term, or structure.
Product transfers are often seen as straightforward because they typically involve less paperwork. There is usually no need for a new affordability assessment, income checks, or property valuation, provided nothing else is changing.
For homeowners whose circumstances have changed since they first took out the mortgage, this simplicity can be an important consideration.
What Does Switching Lender Involve?
Switching lender means taking out a new mortgage with a different provider, commonly referred to as remortgaging.
A remortgage is treated as a new application. The new lender will usually reassess income, outgoings, credit history, and affordability using their current criteria. They will also value the property and review the loan-to-value (LTV).
Although switching lender involves more steps, it can give access to a wider range of mortgage deals, rates, and features than may be available from an existing lender alone.
Common Reasons Homeowners Stay With Their Lender
Many homeowners choose to stay with their current lender because of convenience and certainty.
Product transfers are often completed quickly and usually do not require legal work, which can reduce costs and delays. This can appeal to borrowers who want a simple process or who are close to their deal end date.
Staying with the same lender can also be relevant where circumstances have changed, such as reduced income, becoming self-employed, or approaching retirement. In these situations, a product transfer may still be available even if switching lender would involve more scrutiny.
Some lenders also offer competitive rates to existing customers, particularly where the mortgage balance is low relative to the property value.
Common Reasons Homeowners Switch Lender
Other homeowners explore switching lender to see whether better value or different features are available elsewhere.
New lenders may offer lower interest rates, which can affect monthly payments or overall borrowing costs over the deal period. Switching may also be considered where a borrower wants to change the structure of the mortgage, such as adjusting the term, borrowing additional funds, or changing from interest only to repayment.
In some cases, homeowners switch because they want features their current lender does not offer, such as different overpayment options or offset facilities.
How Fees and Costs Compare
Fees are an important part of deciding whether to stay or switch.
Product transfers often involve minimal costs, with some deals carrying no arrangement fee and no valuation or legal fees. This can make them appealing at first glance.
Switching lenders may involve arrangement fees, valuation fees, and legal costs. However, some remortgage deals include incentives such as free valuations, free legal work or cashback. Comparing the total cost over the deal period, rather than just the headline interest rate, can provide a clearer picture.
Early Repayment Charges and Timing
If your current mortgage is still within a fixed or discounted period, leaving early could trigger early repayment charges (ERC).
These charges can be significant and may affect whether switching lender is worthwhile. For this reason, many homeowners review their options in the months leading up to their deal ending, rather than switching immediately.
Planning ahead can help avoid unnecessary costs and reduce the risk of the mortgage reverting to a standard variable rate.
How Personal Circumstances Can Influence the Choice
Personal circumstances play an important role in determining which options are available.
Stable income, a strong credit profile, and a lower loan-to-value (LTV) can widen the range of lenders willing to consider an application. Changes such as increased financial commitments, variable income, or changes to household structure can narrow those options.
Future plans can also be relevant. For example, homeowners planning to move in the near future may prioritise flexibility over securing the lowest possible rate.
Reviewing Both Options Side by Side
Many homeowners choose to review both a product transfer and a remortgage at the same time. This allows for a clearer comparison between the simplicity of staying with the same lender and the potential benefits of switching.
Reviewing options early can also help avoid moving onto a lender’s standard variable rate, which is often higher than fixed or discounted alternatives.
Finding Support When Comparing Options
For homeowners who want help understanding the differences between staying with their current lender and switching, our Best-Rated Remortgage Brokers Guide can be a useful starting point. It highlights advisers with experience reviewing both product transfers and remortgage options, helping borrowers understand what may be available based on their circumstances.
Common Pitfalls to Avoid
One common mistake is taking no action and allowing a mortgage to move onto a standard variable rate without reviewing alternatives.
Another is focusing only on the interest rate and overlooking fees, flexibility, or suitability over the deal period. Some homeowners also assume switching lender is not possible due to changed circumstances, when options may still exist.
Conclusion
There is no single answer to whether it is better to stay with your current lender or switch. Staying with the same lender can offer simplicity and speed, while switching may open access to different rates or mortgage features.
Reviewing both options before a deal ends helps homeowners understand what is available and avoid unnecessary costs. Taking time to compare, rather than defaulting to one route, is often the most practical way to approach the decision when a mortgage deal comes to an end.
