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Can you remortgage early? The easy answer is yes, you can remortgage before your current deal ends, but it often comes with additional costs. The most significant of these is an early repayment charge, otherwise known as ERC, which lenders apply if you exit your mortgage during a fixed or a discounted term. ERCs can be a percentage of your remaining balance, making them potentially expensive. However, remortgaging early could still be worthwhile if you can secure a much better interest rate or improved terms.
It is deeply important to weigh the savings against any fees, including ERCs, arrangement fees and legal costs, before making a decision.
Remortgaging early means switching your existing mortgage to a new deal before your current fixed, tracker, or introductory rate period has ended. Typically, borrowers wait until their deal expires to avoid any extra charges, but early remortgaging involves leaving that agreement ahead of schedule and can be done for a multitude of reasons.
At the end of a term, you can usually switch without penalties, whereas moving early often triggers fees such as early repayment charges (ERCs). Despite this, some homeowners choose to act early to secure a better interest rate, release equity or change mortgage terms.
Lenders generally allow early remortgaging but treat it as a contract break. This means they may apply charges or conditions to recover lost interest, so it’s important to review your mortgage terms carefully before proceeding.
Choosing to remortgage before your current deal ends can offer several financial advantages. The primary reason is the chance to secure a lower interest rate, which could reduce the total amount you pay over the life of your mortgage. This has the potential to lead to more affordable monthly repayments, helping to ease ongoing financial commitments.
Homeowners can also remortgage early to unlock equity tied up in their property, providing funds for renovations, large purchases, investments or other financial needs. It can also be an opportunity to switch to a deal that better suits your situation, like moving from a fixed rate to a variable option for added flexibility.
In some cases, remortgaging early is used to consolidate existing debts or restructure finances, making repayments more manageable and potentially lowering overall interest costs.
The timing for remortgaging after purchasing a property can vary, but many lenders apply a minimum waiting period. This will more often than not be around six months. This is sometimes referred to as the “six-month rule,” although it’s not universal and depends on the lender’s individual criteria. Some may allow earlier applications, while others enforce far stricter limits, it will be worth knowing which your lender does prior to signing.
Lender-specific requirements play a significant role, with factors such as your credit profile, income stability and repayment history influencing eligibility. Also, any changes in your property’s value can affect how soon you can remortgage. If the value has increased, you may have more equity available, which can improve your chances of securing a better deal.
Your current level of equity is crucial, as higher equity often leads to more competitive interest rates and a wider choice of mortgage products.
Remortgaging before your current deal ends can entail several costs that require careful consideration. One of the main charges is an early repayment charge, which lenders apply if you leave your mortgage agreement ahead of schedule. This fee is typically a certain percentage of the remaining balance and can be significant.
You may also incur exit fees or administrative costs when closing your existing mortgage. On top of that, there can be additional expenses like property valuation fees and legal costs, although some lenders offer deals that include these as incentives.
It’s important to weigh these costs against the potential savings of switching to a better rate. In some cases, the long-term savings on interest and reduced monthly payments can outweigh the upfront fees, making early remortgaging a worthwhile option.
The ideal time to remortgage is often when you are in the latter stages of your fixed-rate deal. At this stage, you can avoid being moved onto your lender’s standard variable rate, which is usually higher and less predictable. Planning ahead allows you to secure a new deal before your current one expires.
It may also be worth considering a remortgage when interest rates become more favourable, giving you the opportunity to lock in a better rate and reduce your overall costs. Improvements in your financial situation, such as a higher income or better credit score, can also make you eligible for more competitive mortgage products.
In some cases, remortgaging earlier can make sense if any early exit charges are low enough to be outweighed by the savings you could achieve by switching to a more suitable deal.
Remortgaging early requires a clear approach to make sure it benefits your financial position. Begin by examining your current mortgage agreement, including any ERCs and other exit fees, so that you understand the cost of leaving your deal early.
Once you’ve done that, explore and compare mortgage offers from different lenders to find one that better suits your needs, whether through lower rates or improved terms. It is also important to review your eligibility first by looking at your income, credit score and overall affordability.
After choosing a suitable deal, you can apply either directly with a lender or through a mortgage broker, who may offer access to a broader range of options. If your application is approved, the legal work and property checks will be carried out and your new mortgage will replace the existing one.
Choosing to remortgage ahead of schedule can come with potential downsides if not carefully evaluated. Potentially the biggest risk is that the associated costs, which could be anything from early repayment charges, exit fees and legal expenses. may end up exceeding any financial savings gained from a new deal.
Another factor to consider is the possibility of extending your mortgage term. While this might reduce your monthly payments, it can increase the total interest you pay over the life of the loan. You’ll also need to go through a new affordability assessment and if your financial circumstances have changed, it could affect your eligibility or the rates available to you.
Finally, timing the market can be tricky. Interest rates may improve after you switch, meaning you could miss out on more competitive deals later on.
Yes you can remortgage early on a fixed rate, but lenders will implement early repayment charges if you leave during that fixed term. With the right deal this approach can still be worthwhile if the new deal is good enough.
This all depends on whether the savings from a new mortgage deal outweigh the ERC cost. For example, switching to a much lower rate or consolidating debt can sometimes justify the fee, it is important to be absolutely certain first.
Remortgaging typically takes 4–8 weeks, depending on the lender you are using and your circumstances. Delays can occur with property valuations, legal work or incomplete documentation, while straightforward cases may be completed faster.
Yes, this method is known as a product transfer, often with lower fees and less paperwork. However, switching to a different lender may offer better rates for new customers, so it’s important to compare both options carefully.
If you’re thinking of remortgaging early but aren’t sure if it’s the right move for you, get in touch with the expert team at Proper Advice, and we can discuss your options.
Your home may be repossessed if you do not keep up repayments on your mortgage. You may have to pay an early repayment charge to your existing lender if you remortgage.
