Yes. We can do a rate switch if your mortgage is interest only as most lenders accept them. However, we may need some additional information from you to give to the lender for the underwriting process.
For instance they may ask us for…
- Repayment vehicle. We will need to know how you’re going to repay your loan (e.g. sale of secured property)
- Estimated retirement age
- How much interest you owe on each sub account (if you have more than one)
- Amount of Early Repayment Charges (ERC’s) if you have any
- Interest only amount if you have a part repayment and part interest only mortgage
One of our brokers can easily provide this information to the lender. The process will remain straightforward for you, and we will strive to keep the application as uncomplicated as possible.
How to Switch Rates on an Interest-Only Mortgage: A Step-by-Step Guide
If you’re thinking about switching rates on your interest-only mortgage, you’re not alone. Many homeowners explore this option to save money, lock in a better deal, or adjust their payments to fit their financial goals. While the process might seem daunting, breaking it down into simple steps can make it much easier. Here’s how you can get started:
1. Take a Close Look at Your Current Mortgage
Before making any decisions, it’s important to understand the details of your current mortgage. Pull out your paperwork or log in to your lender’s online portal to check:
•Your current interest rate.
•How much time is left on your mortgage term.
•Whether there are any restrictions or fees for switching rates.
This information will help you figure out your starting point and what options might work best for you.
2. Find Out if You’re Eligible for a Rate Switch
Not everyone qualifies for a rate switch, so it’s worth checking your eligibility early in the process. Lenders often consider several factors, including:
•How much equity you have in your home (known as the loan-to-value ratio).
•Your credit score and overall credit history.
•Your income and whether it meets the lender’s affordability requirements.
If you’re unsure about meeting these criteria, don’t worry—there are specialist brokers who can guide you through the process.
3. Explore Different Rate Options
Once you’ve confirmed your eligibility, it’s time to compare the various rate options available. Each has its own pros and cons, so think about what fits your financial needs best:
•Fixed Rates: Great if you want predictable monthly payments for a specific period.
•Tracker Rates: These follow the Bank of England’s base rate, so your payments can rise or fall depending on interest rate changes.
•Variable Rates: Offered at the lender’s discretion, these rates can change at any time.
Online mortgage calculators are handy tools for estimating how different rates will affect your payments, so be sure to use one.
4. Talk to Your Lender or a Mortgage Broker
Once you’ve done your research, reach out to your lender to ask about their rate-switching options. Alternatively, if you want to see a wider range of deals, consider working with an independent mortgage broker. Brokers often have access to products that aren’t advertised directly by lenders, which could help you secure a better deal.
5. Apply for Your New Rate
When you’ve decided on the best rate for your situation, it’s time to apply. Your lender may ask for updated documents, such as proof of income or details about your property, to finalize the switch. If you’re working with a broker, they’ll handle most of the paperwork for you, making the process smoother.
6. Confirm the Switch and Update Your Payments
Once your application is approved, your lender will provide updated mortgage terms. Review them carefully to make sure everything looks correct, including:
•The new interest rate.
•Your revised monthly payment amount.
•Any changes to your repayment schedule.
Finally, update your direct debit or payment method to reflect the new terms and avoid missing any payments.
How we work:
- We will use the information you provide to access your mortgage account.
- We’ll find the best offers that suit you and send you a few quotes by email for your review.
- Once you have reviewed the quotes and are happy to accept one of the rates, you will let us know which one to accept
- We will accept the rate and send off the rate switch application
- After acceptance, we will monitor the rates until your current fixed rate expires. If the rates decrease, we will accept the lower rate to make sure you receive the best deal available.
- Once the application has completed, we will send you 10% of the commission we receive from the lender
