That ‘too good to miss’ rate might look pretty tempting… much like a pancake van on a chilly autumn evening. But – the small print can come with costly surprises.
Many of us get drawn like a moth to a flame when it comes to shiny, cleverly marketed deals and switch before really looking into the small details.
In this article, we will outline how to scope out the hidden costs before you commit to switching.
The Fine Print That Bites
An Early Repayment Charge (ERC) is a fee that your lender charges if you pay off, or switch your mortgage before your fixed deal comes to an end. This is a tactic lenders use to put you off leaving them early.
So if you owed £250,000 and your ERC is at 3%, then that is a £7500 charge. That is just enough to obliterate your savings that you’d make from getting a new deal, rendering the whole ordeal useless.
Even if it’s only a few days early, this can still trigger the charge so it’s super important to make sure you have that specific date in your financial diary, and use that to go off before signing a new mortgage offer.
If You Switch Early
Timing is everything.
If you’re looking at remortgaging, doing this too early can trigger an ERC, but, and here’s the tricky part, waiting for too long could mean you roll onto your current lenders standard variable rate (SVR). This is usually even higher!
An SVR is basically the default rate you get moved onto once your fixed deal comes to an end. This can be up to 1-2% higher than your old rate – so it is very much worth keeping a close eye on this.
Say you switch two months early, you might pay thousands in fees. Say you wait too months too long and you could lose just as much, if not higher, in large monthly payments.
So we say it again: timing is everything!
Broker vs Direct Deals
It’s easy to be drawn in by the lowest rate you see online. Comparison sites make it look simple: find the cheapest interest rate and switch. But mortgages aren’t always that straightforward. Some of the “best” rates come with large product or booking fees that can quietly add hundreds or even thousands to your total cost.
A deal with a slightly higher rate but lower upfront fees could work out cheaper overall. That’s where an adviser or mortgage broker can really help. They’ll look at the full picture, not just the rate, and factor in all the extras such as legal costs, valuation fees, and how long you plan to stay in the property.
And while “free legals” or “cashback” offers can sound attractive, they sometimes come with strings attached, such as using a specific solicitor or waiting longer for the process to complete. The key takeaway? Don’t be blinded by the headline number. A broker’s job is to make sure the maths, and the fine print, really stack up in your favour.
Simple Checks That Save Thousands
Before you commit to a new deal, take a moment to double-check a few small but important details. They could make a big difference to what you pay over the long run.
Start with your early repayment charge date, switching even a few days before it ends could trigger a penalty. Then look beyond the rate and compare total borrowing costs, including any product, booking, or exit fees. It’s also worth checking your loan-to-value ratio, as a small shift in your property’s value could push you into a different bracket and change your available rates.
Ask about flexibility, too. Can you make overpayments if your income rises? Could you transfer the mortgage to a new property if you move? Small features like these can save a lot of hassle later.
Finally, never be afraid to ask questions. If any term or cost isn’t clear, get your adviser to explain it in plain English. Sometimes the deal that looks less exciting at first glance turns out to be the one that fits your life, and your wallet, best.
Final Word
We know this can be slightly complicated and it is tempting to shove it under the rug, but that’s why getting the help of a professional is a brilliant way to make sure these simple checks work in your favour.
Are you thinking of remortgaging? Get in touch with us so we can help you review your deal before you commit to it. A quick chat with us could stop you from making an expensive mistake, plus we can help you find a mortgage that actually suits you.