Should you find a new mortgage with Monzo?

Selected Monzo customers can now search for remortgaging deals in their banking app, as the challenger bank tests a new tool.

Currently available to 2,000 Monzo customers, the tool shows users personalised remortgage deals through the Monzo app in partnership with online broker Mojo Mortgages.

As it focuses on remortgaging, it'll only be useful for people who have an existing mortgage but are looking to switch to a new deal.

We take a look at how this feature works, and whether it will truly find you the best remortgaging deal on the market.

How does Monzo's mortgage feature work?

Mojo Mortgages, the online broker that powers Monzo's feature, uses an algorithm to help users find mortgage deals based on their needs and requirements.

Using this tool through Mojo's website, you could be asked more than 60 questions before you are given recommendations. In the Monzo app, this is reduced to 11.

This is because Monzo will share, with your consent, basic data with Mojo, such as your name and address. You'll still have to enter further information such as the value of your home, and current mortgage debt.

To save you entering details about your spending habits, Mojo will estimate these based on data from the Office for National Statistics (ONS).

Mojo will also have access to previous credit checks carried out on you by Monzo, although no new credit checks will be involved, and using the tool won't affect your credit score.

Once you've filled out the questions, you'll be able to browse the mortgage deals Mojo finds within the Monzo app.

After browsing these deals, you can schedule an appointment with a Mojo adviser to take your application further.

The adviser will discuss your plans and requirements, and check that the ONS expenditure estimate is correct. According to Mojo's chief product officer Eddie Ross, it has proven to be accurate in practice.

If you're one of the 2,000 customers selected for the trial, you can use the feature already. Monzo told us it has no short-term plans to extend the feature beyond this initial trial.

Ross told Which? that Mojo has plans to roll out more partnerships in the future, each one a 'unique experience'.

Will it get you the best remortgaging deals?

Mojo Mortgages has confirmed it is a whole-of-market broker, searching 20,000 deals from 90 lenders. Products will be ordered by cheapest overall cost, taking fees, cashback, and interest rates into account.

Mojo will be paid commission from lenders, and it pays Monzo a commission, if you choose a deal through the app. However, it says this is not factored into the algorithm, so you'll be shown the best deals for your circumstances.

Any impartial, whole-of-market mortgage broker should also do this.

Will this be a faster way of finding mortgage deals?

The main benefit of this new feature is its convenience. Users can see the best remortgaging deals within the Monzo app while entering minimal information.

That said, the process is only partly automated, so you'll still need to speak to an adviser on the phone to take out a new deal.

While the app uses ONS data to predict your monthly expenditure, this might not reflect your own spending habits. You'll still need to undergo a full affordability check before actually being approved for the mortgage, as well as a hard credit check.

The tool could give you a quick indication of how much you could save by remortgaging, but the main draw is comparing deals through your banking app. How much time you'll actually save in switching to a new mortgage remains to be seen.

Fellow challenger Starling Bank offers its own in-app mortgage feature. It partnered with online broker Habito in 2018 to let customers manage their mortgages and contact a digital broker through the Starling app.

If you are looking to remortgage online, rather than speaking to an adviser, there are a number of digital brokers currently operating. You can find out more in our guide to online mortgage brokers.

• Find out more: see what you should look for in an adviser with our guide to choosing a mortgage broker

Should I remortgage?

If your mortgage's introductory period has come to an end, it's likely you'll have reverted to your lender's standard variable rate, which will be higher than your initial interest rate.

At this point, remortgaging can allow you to switch a better deal with a new, lower initial rate. We've found that switching to avoid an SVR can save you at least £200 a month (based on borrowing £200,000).

We published an in-depth exploration of the best remortgaging rates in April, complete with advice on finding a low rate.

You can also remortgage to release equity from your home and raise funds. Read our guide on remortgaging to release equity for advice on how, and whether, to do this.