What happens if I don’t remortgage?

If you are coming to the end of your existing mortgage deal, then you may be considering a remortgage. A remortgage, in many ways, works in the same way as finding your first mortgage. However, a remortgage can be a very good opportunity to make savings on your monthly outgoings.

If you do not remortgage, you will normally automatically move onto your lender`s SVR (standard variable rate). This is the lender`s basic rate, which other mortgage deals are often based around.

Reasons you might want to avoid the SVR

The interest rate on an SVR mortgage is typically higher than other mortgage deals, making monthly payments more expensive. In particular, a lot of variable-rate mortgages are discounted from the SVR - so if you are interested in a variable-rate mortgage, it`s worth signing up for the discounted rate.

SVR mortgages are also potentially more ‘risky` in terms of interest rates than fixed-rate mortgages, and your payments may change from month to month - which can be a burden, especially if you are on a higher interest rate than you need to be. With a fixed-rate mortgage, you can be sure of exactly how much you will pay towards your mortgage each month, and many people prefer this security.

Advantages of a remortgage

• Save money. When you remortgage, it may be possible to get a deal with a lower interest rate than you are currently on. Even a small cut (e.g. 0.5% to 1% can make a big difference to how much you pay each month. And following the recent base rate cuts, it`s very much possible to get a lower rate than you may have been offered two or three years ago.
• Change the type of mortgage. If you start paying your lender`s SVR, your rate is liable to change. By remortgaging, you can move onto the more consistent rate of a fixed-rate mortgage - or if you think the base rate will remain low, a tracker mortgage might save you the most money.

For more information on remortgage deals, visit Think Money

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