From getting a better deal on your interest rate, to increasing your loan term and reducing your repayments, there are many reasons why you might want to switch your home loan.
In this guide, we cover the benefits and costs of switching your mortgage, and explain how the process works.
If your fixed-rate mortgage term is coming to an end, you might want to take out another fixed-rate deal rather than revert to your bank’s variable-rate mortgage. A variable rate will go up and down with the EIBOR (Emirate Interbank Offered Rate).
Or, if you’re on a variable rate already, you might feel more comfortable on a fixed-rate mortgage where your repayments stay the same each month.
Finally, you might have just spotted a better deal somewhere else and want to make the most of a lower interest rate.
Explore: View our current home loan rates
If your bank account, credit card and investment account are all with the same bank but your home loan isn’t, it might make sense to transfer the balance of your mortgage to your bank so everything’s in one place. That’s as long as it doesn’t cost you more in the long run.
Explore: Balance transfers with HSBC
You might want to remortgage simply to extend the duration of your home loan. Extending from 20 to 25 years, for example, will give you more time to repay your loan, and make your monthly repayments smaller.
On the other hand, if you like the idea of being debt-free sooner and have the cash flow on hand to do so, you could switch to a mortgage that lets you make bigger repayments each year without an Early Settlement Fee (ESF).
With an HSBC mortgage, you get an overpayment allowance of up to 25% per calendar year, giving you extra flexibility.
Your LTV ratio is the amount you’re borrowing as a percentage of the value of your property. The more of your own money you put towards buying your home as a down payment, the lower your LTV will be.
When you take out a home loan, your LTV can affect the interest rate you get.
Generally speaking, with a lower LTV, you’ll get lower interest rates to choose from as it’s less risky for your lender.
So, if you’ve been repaying your mortgage for the last 5 years, for example, you may be able to remortgage at a lower LTV than when you originally bought your home.
Explore: Our fixed-rate home loans
If you’ve paid off a considerable chunk of your existing mortgage, you could apply to release equity from your property.
As you’ll be applying to borrow more money in this situation, it’s a more complicated process than just switching your rate, including a credit check when you apply.
You may incur some costs when switching your mortgage deal. The main one to be aware of is an Early Settlement Fee (ESF).
If you have a fixed-rate mortgage, there will likely be an ESF if you switch or repay your loan before the end of the fixed term.
Even if you have a variable-rate mortgage, you could still be charged an ESF for switching before a certain point, so check with your lender first and weigh up whether switching is worth it.
If you’re sticking with the same lender, switching mortgages can take as little as a few working days.
If you’re transferring your mortgage to a new lender, it could take up to 14 working days or more.
Explore: Our variable-rate mortgages
