Retention, in the context of mortgages, refers to the efforts your current lender makes to keep you as a customer rather than losing you to a competitor through remortgaging. As your fixed or tracker rate approaches its end, your lender may contact you with a retention offer, which is essentially a product transfer deal designed to be competitive enough to persuade you to stay.
Retention offers can sometimes include rates that are not available to new customers, as the lender has an incentive to keep your business. However, this is not always the case, and retention deals are not guaranteed to be the best option available on the open market.
It is always worth comparing your lender's retention offer with deals from other lenders before making a decision. A mortgage broker can carry out this comparison for you and advise whether staying or switching is the better financial move.
Your five-year fix is ending in two months. Your lender sends you a letter offering a new two-year fix at 4.1% as a retention deal. Your broker compares this with the wider market and confirms it is competitive, so you accept the offer.
Key Points
- A deal from your existing lender designed to stop you from switching
- Usually offered as your current deal approaches its end date
- May include rates not available to new customers
- Not always the best deal on the market
- Always compare with remortgage options before accepting