The difference between rate switching and remortgaging

(12 Posts)
Ireallydontseewhy Fri 19-Aug-16 17:04:21

So, prompted by another thread and trying to understand the world of mortgage rates here! In the past i've read that remortgaging when the introductory rate runs out can be a faff - affordability checks and the like - and sometimes you have to go onto the svr if you don't qualify under the new criteria.
But, as someone mentioned on mn on another thread, some lenders will allow you to switch to a new rate when the 'deal' runs out - online in 5 minutes, no hassle whatever.
So i think my question is - is there a difference between remortgaging and 'rate switching'? (Obviously you remortgage if you change lender or increase the loan, but i'm taling about when you stay with the same lender).
Thanks in advance to anyone who knows!

wowfudge Fri 19-Aug-16 20:47:08

You usually still have to pay an arrangement fee, but you aren't borrowing more money and there's no valuation of the property. It's a way of stopping you from remortgaging with another lender as well as easier for the customer.

Eminybob Fri 19-Aug-16 20:52:04

If you move your mortgage to another lender it's a remortgage.

If you stay with the same lender on a new deal, it's a rate switch.

Simple.

Ireallydontseewhy Sat 20-Aug-16 09:56:51

Thanks both! Yes, Rate switching does sound much simpler!
It does make me wonder why there was so much kerfuffle at the time mmr was introduced, and people were concerned they'd have to go on the svr because they wouldnt meet new affordability criteria. Is it that not all lenders offer rate switching when the 'deal' comes to an end, so that then you do have to remortgage to get a lower rate?

Sunnyshores Sat 20-Aug-16 16:33:42

Yes, your right - your current lender wont always let you remortgage. For example if you no longer meet their lending criteria (new jobs, increased debts, CCJs, reduced income, self employed, number of BTLs, change in house price, outgoings etc etc).

Bagina Sat 20-Aug-16 16:37:05

It's called a product change if you stay with your current lender. They can usually find you one with no fee. They don't ask any questions about current finances and assume your financial situation is the same as it was. We've just cut our mortgage a lot by doing a product change.

Ireallydontseewhy Sat 20-Aug-16 16:53:43

Thanks again all! Sunnyshores, why would it matter if your current lender didn't let you remortgage if you can rate switch or product switch with that lender anyway? Is it that some lenders don't offer rate switch/product switches at all, but insist you either go on svr or remortgage once the initial 'deal' comes to an end?
(Suspect the answer is that lenders have different practices, but is confusing me!)

mrd Sat 20-Aug-16 17:35:06

Interesting - so when you switch rates at the end of a fix, what's the LTV based on if there's no valuation? Purchase price? Or some kind of estimate based on house price inflation/deflation in the area?

Bagina Sat 20-Aug-16 17:56:31

They take the valuation from RICS (in our instance).

Sunnyshores Thu 25-Aug-16 18:39:13

Sorry, what I meant is that your current lender may not want to lend you any money fullstop. We'd been with Santander for 10 years (on different products) when our latest fix ended they invited us to move to another product, but when we filled out the paperwork they refused us (new rules about self employed).

So your current lender can refuse to lend you ANY mortgage because their lending criteria have changed or because your circumstances have changed.

Its not as easy these days as just phoning and swapping to this or that rate.

LumpyMcBentface Thu 25-Aug-16 18:41:36

We did ours online in about two minutes. Didn't even have to sign anything. Saved £250pm.

Ireallydontseewhy Thu 25-Aug-16 19:19:54

So Sunnyshores, when that happened did you have to stay on your current Santander mortgage but go on to the svr - or whatever the 'follow on' rate is?

maybe it depends on the lender - for example pps have said that Barclays just lets you switch in the 5 minute online way, so maybe different lenders have different policies.

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