When is the best time to switch mortgage products ?
When your initial mortgage deal expires your mortgage rate will revert to a lenders Standard Variable Rate (SVR). This is almost ALWAYS higher than your initial deal rate.
Your options at this stage are to either remortgage away from your current lender OR to switch your mortgage.
Knowing when to switch your mortgage is importance, switching early can save you money initially, but with lenders changing rates regularly - you can end up committing to a higher rate too soon.
Most lenders, including Halifax, Nationwide, Santander, Barclays and Natwest to name a few allow you to switch your mortgage rate to a new product up to 3 months in advance of your mortgage product expiry date. Some lenders (Nationwide) even allow you to commit to a new rate 5 months in advance - although the rate will only apply 3 months in advance.
Committing to a new 'switcher rate' earlier than you current deal end date, could in some cases same you money - the added benefit of course is that lenders will waive any existing product fees.
The other consideration to make before deciding on an actual product is that many of the mortgage switching deals offered by your lender may also have product fees attached to them - so whilst the headline rate may seem competitive, adding say a £999 fee over a 2 year deal may not end up achieving savings at all.
Covid 19 - The effects on Product Switcher Rates
While it can be tempting to commit to a new switcher rate 5 months in advance (as some lenders like Nationwide are offering) of your existing deal end, considering that almost ALL lenders have increased product switcher rates in reaction to the effects of Covid 19 on the property and mortgage market, it seems more prudent not to commit to a product switch rate this early.
If you can save money by switching your product 3 months in advance as most lenders offer - this is certainly worth doing.
SwitchRates.co.uk offer a completely free mortgage switching and remortgaging service.