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Mortgage Advisor & Director
When you are nearing the end of a mortgage’s introductory rates period, the time for mortgage renewal is upon you. But what exactly is mortgage renewal, how do you do it, and how do you get the best rate? Read on to find out...
What is a mortgage renewal?
Mortgage renewal is the process of entering a new mortgage agreement with your lender before the introductory rate period on your current deal has expired. You are essentially ‘fixing’ back in with your lender to avoid ending up on a standard variable rate (SVR).
People do this because SVRs are often significantly more expensive than the introductory rates on a new fixed-rate or variable rate mortgage deal, but some borrowers might choose to move onto an SVR if they want the flexibility to make uncapped overpayments, for example.
Mortgage renewal is just one of your options if you are nearing the end of an initial interest rates period. The main alternative to this is remortgaging with a new lender, in the hope of securing a superior interest rate, or entering a deal with features that better suit your needs.
Mortgage renewals are sometimes referred to as ‘product transfers’ but it will also be accurate to call it “remortgaging/refinancing with your existing mortgage lender”.
How to begin the mortgage renewal process
Some borrowers don’t need to do anything at all, as most mortgage lenders reach out to their customers at least six months before their renewal is due to upsell a product transfer. It is, however, advisable to start thinking about your options and shopping around earlier.
Your options when an initial rates period is due to expire include:
- Agreeing the same type of mortgage deal with your current lender
- Switching to a new type of mortgage with your lender
- Temporarily moving onto their SVR
- Remortgaging with a new mortgage provider
Whichever option you are considering, the best course of action is to speak to a mortgage broker before agreeing a deal with your existing lender. They will be able to advise you about whether sticking with your current mortgage provider is in your best interest.
Our brokers have access to the entire market and can help you establish whether there is a lower rate or more suitable deal available elsewhere.
Compare mortgage renewal deals for FREE on Teito
What interest rate to expect
Some mortgage lenders offer exclusive rates to existing customers to encourage them to renew their current mortgage. See the table below for examples of these deals:
Mortgage Lender | Initial Rate Upon Renewal | Product Details |
4.28% | 60% LTV, 2-year fix, £1,495 fee | |
4.24% | 75% LTV, 3-year fix, £999 fee | |
5.94% | 60% LTV, 2-year tracker, No fee | |
4.49% | 5-year fix, 75% LTV, £995 fee | |
5.29% | 75% LTV, 2-year tracker, £999 fee |
These mortgage renewal rates were sourced in November 2024 and were accurate at the time of writing. They have been presented for example purposes, are subject to change, and the above lenders have a wide range of deals available across different LTVs and product types.
It is recommended that you compare remortgage rates across the whole of the market before taking your lender up on a renewal. It is important that you don’t limit yourself to one range of products during your search for the best rate and product for your needs.
How to calculate your new mortgage payments
If you have been offered a mortgage renewal quote or seen a remortgage deal you are interested in, you can use our calculator below to work out the repayments for it.
Simply enter your outstanding mortgage balance (deducting any equity you are releasing) in the input field below along with an interest rate and term length. Our repayments calculator will do the rest, and you can convert the results into interest-only if needed.
When could you be denied a mortgage renewal?
Your mortgage provider might decline you for a renewal if your circumstances have changed since you first took out your mortgage and you no longer qualify for their products.
You might be rejected by your current lender if any of the below applies:
You have severe bad credit
If you have had bad credit since you took out your mortgage, this might stop you from meeting your lender’s eligibility criteria, especially if the issues are severe or recent.
The good news is that not all credit issues will stop you from qualifying for renewal, and even if this is the case, there are specialist lenders who may offer you a remortgage.
You are approaching retirement
If your new mortgage term will take you past the age of 75-85, you might not be able to renew with certain lenders due to their age restrictions. Some mortgage providers will be concerned about how you will make your mortgage repayments in retirement, and be reluctant to lend.
Fortunately there are specialist lenders with no age restrictions at all who might be able to help, as well as alternatives to consider, such as equity release.
You recently became self-employed
If you were in full-time employment when you took out your original mortgage, but turned self-employed before your renewal is due, you might find it difficult to get approved. This is because most lenders need at least two years’ trading history from self-employed applicants.
Self-employed homeowners in this situation are advised to speak to a mortgage broker immediately. With their help, you could find a specialist lender to remortgage with, one who only requires self-employed people to evidence their income with one year’s accounts or less.
Declined on affordability grounds
If your income has declined since you took out your original mortgage, there is a possibility you might no longer be able to pass the affordability assessment for your renewal. Using a broker to find a lender who uses higher income multiples to calculate maximum borrowing, or lets you declare 100% of any supplemental income you might have is a possible solution here.
These are just a few of the reasons why your mortgage lender might turn you down for a renewal. If you think there is any possibility of this, get in touch so one of our experienced mortgage advisors can go through all of your remortgage options with you.
Tips to help you with a mortgage renewal
Below you will find tips to help you get the best deal when it’s time to renew your mortgage:
Don’t accept your lender’s first offer: It’s always worthwhile speaking to your mortgage lender to find out what kind of deal they can offer you, but don’t take them up on it until you have compared every possible alternative across the market.
Optimise your credit reports: Checking your credit reports contain no errors or outdated information could help you qualify for a better rate with either your lender. You can download your files for free by signing up for a trial with Checkmyfile.
Research different product and repayment types: It’s a good idea to familiarise yourself with the different mortgage types available in case a change from your current agreement better suits your need. Research the pros and cons of fixed rate, variable rate and interest-only mortgages thoroughly before you start.
Use a mortgage broker: They can be worth their weight in gold when it's time for mortgage renewal. They can offer impartial advice about whether sticking with your current lender is the best option, and search the entire market for better alternatives. Our brokers often have access to exclusive rates and deals too.
How our brokers helped a homeowner renew their mortgage to consolidate debt
Renewing a buy-to-let mortgage
Renewing a buy-to-let mortgage works in exactly the same way as a product transfer on a residential mortgage. Expect your lender to contact you at least six months before your initial rates period is due to expire to discuss a new deal, but it is highly recommended that you speak to a buy-to-let mortgage broker before this point to review every possible alternative.
You can compare buy-to-let remortgage rates and deals yourself for free on Teito and access support from a specialist advisor, if you need a little help.
Why choose Teito for your mortgage renewal needs?
Even if you are set on sticking with your current lender, comparing rates and deals for free through us can bring peace of mind, as you can find out for certain whether you’re getting the best deal. You can also access impartial advice from a mortgage broker as part of the service.
Here are just some of the reasons people choose Teito for their mortgage renewal:
- Exclusive remortgage rates and deals are available
- Our brokers are whole-of-market and fully impartial
- We are 5-star rated on leading review websites
- It takes minutes to secure a mortgage in principle online
Ready to compare remortgage rates and deals for free, and take advantage of a free, no-obligation chat with a mortgage advisor? Get started here.
FAQs
If your initial rate period is yet to expire, there might be a limit on the amount of mortgage overpayments you can make (10% of the remaining debt is standard). But if you have reverted onto your lender’s SVR, there is no reason why you can’t repay the full amount without penalty.
Choosing an Adviser
Selecting a qualified and experienced mortgage adviser is of great importance. To choose a suitable adviser, evaluate their qualifications, experience, and reputation, and ensure they are regulated by the Financial Conduct Authority (FCA).
Read reviews from previous clients and make sure they provide a clear explanation of the products and services they offer, as well as the fees and charges associated with them.