Shopping around for any utility company or mobile phone provider can save you quite a penny, but does loyalty pay when it comes to getting a new mortgage deal?
If you’re looking to remortgage, you might be tempted to stick with your present provider. After all, your bank already can access your financial information, and it helps you save the irritation of going through the application with another lender.
For some homeowners, however, a show of loyalty will not be free, as banks don’t always reciprocate with better rates.
Here, we assess your choices when you come to remortgage, and provide advice on how to locate the best offer.
What is really a product transfer?
When you remortgage with your current provider, this is whats called an item transfer.
Data from UK Finance shows that nearly 1.Two million homeowners decided on a product transfer in 2022, a lot more than double the number who remortgaged having a different provider.
This can perhaps be put right down to lenders proactively contacting borrowers as they come right at the end of their fixed-rate deal.
Product transfers aren’t the best move for everyone, however.
If you’re seeking to significantly alter the relation to your loan – perhaps to increase your borrowing or repay an aid to purchase equity loan – you’ll will need to go with the formal remortgaging process instead.
Can existing borrowers get a better deal?
The mortgage marketplace is highly competitive, using more than 50 lenders offering residential loans. What this means is the chances of the current lender offering the best rate are low, although some lenders may reward their longstanding customers.
David Blake which? Mortgage Advisers says: ‘In terms of loyalty, it greatly depends on the lending company. Some banks will offer existing customers the same or even slightly better rates than new clients, while for other people the opposite will be true.’
We asked the ten largest mortgage lenders in the united kingdom if they offer better rates to existing customers, and – as you may expect – most remained tight-lipped regarding their retention strategies and offers. A few, however, were more forthcoming:
Cheapest remortgage rates
When we looked at the cheapest initial rates on two and five-year fixed-rate remortgaging deals, we found that the the lowest rates were available to both new and existing customers from the lender in question.
There were two notable exceptions, however. In the two-year fixed-rate market, at both 80% and 90% loan-to-value ratios, rates offered by Accord were not only better for existing customers than new clients, however they were market-leading overall.
The tables below show the best rates looking for each loan-to-value ratio.
Two-year fixed-rate deals
|Max loan-to-value||Lender||Initial rate||Revert rate||APRC||Fees|
|80%||Accord (existing customers)||1.63%||4.99%||4.3%||lb1,495|
|90%||Accord (existing customers)||1.75%||4.99%||4.3%||lb1,495|
Five-year fixed-rate deals
|Max LTV||Lender||Initial rate||Revert rate||APRC||Fees|
|80%||Yorkshire Building Society||2.01%||4.99%||4.1%||lb1,995|
Should you use a broker when remortgaging?
When searching for a mortgage, you can test to find your own deal by looking around different lenders.
Alternatively, you may choose to speak to a whole-of-market mortgage broker, who are able to survey the choices available to you – and, oftentimes, confer with your current lender for you.
Indeed, data from UK Finance implies that about 1 / 2 of product transfers in 2022 were done through an adviser.
David Blake says: ‘It is best to survey the entire market when comparing your mortgage options.
‘Many lenders allow brokers to submit product transfers, so that they will be able to counsel you on the best course of action, considering what your overall lender will give you.’