Firstly, let’s debunk the myth that when your existing mortgage deal expires you must Re-mortgage to secure another deal.  This is simply not true, and in fact the majority of people do not re-mortgage, they perform what is known as a Rate Swap.  The distinction between the two is very simple to understand and it’s important you chose the right option, in fact you may find that you are only able to do one of these anyway.

A remortgage means you are leaving your existing lender and moving your mortgage to a completely different lender.  A rate swap means you are staying with the same lender, but moving onto a new deal with them.  Knowing the difference between the two is vital, so when you ask your broker or lender to help you, you will be sure to get the correct advice.

So which is best for you?

Well that depends on your circumstances. A remortgage will likely be used if you want to raise extra money and/or if another lender has a much better deal that your current lender.  However a remortgage to a new lender means full underwriting, such as proof of income, property valuation, solicitors time etc.  This all comes with cost to you and also will take around 4-6 weeks to complete.  However, if you need to raise extra finance on your home then this is well worth considering and may even be the only option if your existing lender will not increase your loan.  If you chose to stay with your existing lender and borrow more from them, this is also considered a Remortgage and is subject to the underwriting as mentioned above.

The rate swap on the other hand is much quicker and generally has little or no extra cost.  The rate swap means you are not borrowing any more money, and therefore you are just looking to secure a new deal, for instance a new fixed rate for the next period.  This option is quick because it just means your broker or lender need to press a few buttons and nothing else.  There is no need to prove any income, there is no need for a valuation and solicitors are not required.  Most lenders, and hopefully your lender, will offer you a choice between all their deals.

Whether you go for a remortgage or a rate swap you still need to first know the deals available.  For the best advice you should speak to your mortgage broker.  Firstly, they can check the wider market for you, to ensure that whichever option you choose you know it is competitive.  Secondly, they can save you a lot of time by checking all the deals available within a minute for two; and then if you choose a rate swap your broker is unlikely to need to charge any additional fees as the work involved is very light for them.

As for when to start this process, I would suggest at least 6 months before your current deal ends.  Your broker, if you choose to use one, can secure the best deal right away and hold it for you.  Then if the rates go up you already have a cheaper one held.  But if the rates go down your broker can change the one being held for the lower one and hold that for you instead.  So the soon you do this the better.

Here are your options:

(1)  Remortgage to another lender if you want to borrow more or because they have a much better rate than your current lender.  However, you will have to provide income once again, value your home and appoint a solicitor.  The whole process will take 4-6 weeks 

(2) Rate swap with your existing lender if you want to keep the mortgage amount the same and just want a new deal.  This will mean no proof of income, no property valuation and no solicitors.  The whole process should take about an hour.

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