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Why you should be aware of a new mortgage offered by your lender

Lenders will regularly offer new mortgage deals to their clients before the current deal has expired. Although there are some competitive deals on the market, it doesn’t always pay to just accept the new product you are offered.

Some lenders send out letters to existing customers offering them preferential rates on a new mortgage product, without having to pay any penalty charges. However, experts believe that you should consider swapping to a new deal with your current lender carefully, before signing a new contract.

If you swap to a new deal without increasing the amount borrowed or changing any of the existing details, it will be recognised as a ‘product transfer’ and doesn’t have to be included in reports to the Financial Conduct Authority or the Bank of England.

As product transfers are not classed as new lending, the borrower isn’t required to seek professional advice before signing up to a new deal. For many borrowers, transferring to a new product often appears simpler, but it could actually be costing thousands of pounds. By remaining with the same lender, you could miss out on a large number of deals which offer better interest rates.

Another factor to consider before swapping to a new product with your existing lender is the value of your home. If you don’t have an up to date valuation, you may lose out on preferential rates for a lower Loan to Value if your property has increased in value. Before signing up to any new deals, speak to a mortgage adviser who has studied on a CeMAP course.

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