Can You Remortgage Early?

With concerns that rates are edging up, uncertainty surrounding future budgets, and many of us having locked in low rates during the COVID-19 panic, the prospect of remortgaging can understandably be a worrying one. 

Your deal might not have expired yet, but that won’t stop you from thinking about what could happen in the future and wondering what rates will be when the time comes. In fact, what might start as a simple consideration and a series of ‘what ifs’ will naturally lead to wanting to take action for some peace of mind. It’s safe to say that you’re probably finding yourself pondering the question: ‘Can you remortgage early?’.

Our Plymouth-based mortgage advisors are on hand to give you all the answers you need as you explore your next deal and work towards the certainty you need.

How Early Can You Remortgage?

If you’re worried about what mortgage rates might be when your current fixed deal comes to an end, know that there’s no set rule that says you must wait until the end of your deal to remortgage. You can remortgage early, but it’s important to consider the Early Repayment Charges (ERC) applicable should you do so. Depending on how early you remortgage, these charges can rack up significantly and far outweigh the savings from a new deal.

That said, it is usually possible to remortgage 6 months early without incurring extra fees. At the very least, starting to explore and compare your options at least 6 months before your current deal ends will stand you in good stead to secure the right product. If you do not lock in a new fixed-term deal, your lender will typically move you onto their standard variable rate (SVR) which is subject to change and will not offer the monthly payment certainty of a fixed deal. 

Reasons To Remortgage Early

There are a number of reasons why you may be seeking to understand whether you can remortgage early, including:

Possible Rate Changes

Interest rates can change frequently and, as the past few years have shown, drastically. For example, many fixed-rate mortgages agreed during the COVID-19 pandemic had exceptionally low rates. If you took out a mortgage during this time, it is highly likely that your deal will now be nearing its end and a new deal or automatic move to your lender’s SVR will result in higher monthly payments.

By exploring your options before the end of your current fixed rate, you can be certain that you’ve got the very best deal available to you in the current market. Locking in a rate early can also give you certainty over future payments before any further disruption to interest rates (for example, as a result of the upcoming government budget). 

Equity Changes

UK property prices have risen 2.8% in the past year alone, so it’s likely that your property’s value will have increased since you first arranged your mortgage. Equity changes like this can have a direct impact on the deals available to you; this is because lenders will view you as lower risk as the loan-to-value ratio (LTV) decreases. 

By exploring your remortgage options before your current deal ends, you can take advantage of any improvements in your equity to secure a more competitive rate or better terms compared to what you were offered when you first bought your home. Of course, if you do this more than 6 months before your deal ends then you will need to consider the implications of ERCs and should always seek advice from a qualified mortgage advisor first. 

Changing Circumstances

Life changes, both in and out of your control, can make the prospect of an early remortgage compelling. For example, you might want to raise funds for home improvements or to consolidate debts, or you might be looking for a more flexible mortgage product to reduce financial pressures amidst an ongoing cost of living crisis. Remortgaging early can help you to explore these financial goals and find a product that better suits your current circumstances. 

Remortgaging With The Same Lender

It’s important to know that you can also remortgage early with the same lender. In most cases, the ‘remortgage’ will actually be handled as a product transfer and moved onto a new deal. Because your lender will already hold all of your relevant personal and financial details, this process is typically very quick and simpler than remortgaging with a different provider.

Your current lender may even offer incentives to get you to remortgage with them, such as loyalty rates or reduced product fees. However, if you are considering remortgaging early it is always worth taking the time to look elsewhere and see what other lenders can offer you. Yes, the convenience of staying put is undoubtedly appealing, but the best rate or most suitable product for you may lie elsewhere. By considering all of your options before your current fixed-term deal ends, you can ensure that you maximise the benefits of an early remortgage. 

In addition to the above, many existing lenders have shifted towards only allowing existing customers to secure a new deal 3 months before their existing rate comes to an end. Whilst this is always a major issue, it can come with some significant risks if interest rates are on an upward trend. Waiting until the last minute could be costly if rates have increased above the rates available earlier by changing lenders.

Should You Remortgage Early?

While the answer to ‘can you remortgage early?’ is ultimately yes, whether you should remortgage early depends on your individual circumstances. Factors including your current lender, market conditions, reasons for wanting to remortgage, and the time remaining on your current deal all need to be considered carefully. This means that it is vital you seek specialist advice from a qualified mortgage advisor before remortgaging.

At Mewstone Mortgage Advice, our local mortgage advisers are on hand to help you explore all of your options, assess any potential savings, and find a remortgage deal that works for you. We have access to the whole of the market and will regularly search the market to find you the most suitable product, both now and in the future. Simply get in touch via 01752 938933 or book a quick call at a time that suits you and we can discuss your needs further.