How Soon Can You Remortgage Before Your Fixed Rate Ends?
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Home » How Soon Can You Remortgage Before Your Fixed Rate Ends?
How Soon Can You Remortgage Before Your Fixed Rate Ends?
Can you remortgage a fixed rate early? How soon can you remortgage before the fixed rate ends?
You can, but if you’re not at the end of your fixed rate you might have to pay an early repayment charge. That charge will depend on how far you’re into your fixed rate and what terms were issued as part of your mortgage offer.
In theory, you can remortgage whenever you want to, but you need to factor early repayment charges in. To avoid those charges, we normally begin the process six months before your rate is due to end.
This gives us the opportunity to secure a rate at the earliest opportunity. If rates increase before your fixed rate ends, you’ll have secured a lower rate. On the other hand, if they were to decrease, we could then look to secure a lower rate on your behalf. It’s a win-win situation.
What happens when you remortgage a fixed rate early? What if I do not remortgage when I get to the end of my fixed rate?
The process for remortgaging is pretty much the same whether you are still fixed into your rate or coming to the end of it. We would do a full mortgage fact find and then have a look into the appropriate mortgage options for you. As I mentioned before, we need to consider if it’s the right thing to do, based on those early repayment charges.
We will also explore your reasoning for a remortgage at that time – there may be alternative options that are better suited to you.
If you don’t remortgage and your fixed rate comes to an end, you would fall onto the lender’s standard variable rate. That is usually considerably higher than the fixed rate, so ultimately your monthly payments would go up. You’d have to rework your budget to manage.
What we would say is get in touch with a mortgage advisor at least six months before your rate is due to end. Explore all the options to avoid your payment going up heavily on the lender’s standard variable rate.
Are there any exit fees that apply or any other costs involved here?
When you originally take out that fixed rate mortgage, the lender outlines in your mortgage offer all the costs involved to exit the mortgage – whether that be early or once your fixed rate period has ended.
There may be an early repayment charge if you redeem your mortgage within your fixed rate period above your allowance. Those repayment charges can vary from anything from 1% to 5% of the mortgage balance – so they can be quite hefty if you’ve got a large loan amount.
Some lenders also charge an exit fee which can be anything from £50 to £100 – it just covers the admin fees for them of redeeming a mortgage early and closing down that account.
With remortgaging, there are solicitors fees involved, just like a purchase. Their cost needs to be factored in as well. Some lenders will charge a fee to value the property – this can be £100 upwards. They’re the usual costs involved with remortgaging, but some things that pop up along the way – we do try to anticipate them for you.
What options do I have when remortgaging a fixed rate early?
A remortgage is when you move from your existing lender to a new lender. That’s always an option. You remortgage from one lender to the next one on a different rate – whether that be similar or different terms.
But we can also approach your existing lender to see whether they can offer you a rate switch or a product transfer.
If you’re looking to remortgage to raise additional funds, we can also ask your existing lender whether they could offer you a further advance. You would keep your existing mortgage on a fixed rate and borrow a bit more as a top-up, on a rate that’s available on the market now.
This is where mortgage advisors come in so handy – we’re able to look at all those options for you and recommend an approach based on your circumstances. We keep you in a really informed position to know what’s the best option for you.
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Can I remortgage my fixed rate mortgage early if I have bad credit?
Having bad credit is definitely a factor to be considered when remortgaging. Perhaps when you purchased the property you didn’t have any bad credit at all, and it’s something that’s happened in the last few years. You may be with a high street bank at the moment, but if we were to remortgage we may need a non-high street lender that offers slightly higher rates.
We would have a conversation on whether that’s the right thing to do – whether a remortgage is the right option for you or whether to stay with your existing lender. It all depends on the reasons why you’re looking to remortgage and all of those other factors.
Can I remortgage my fixed rate Buy to Let property early?
Yes. The process is really similar to a residential remortgage. We’d factor in that early repayment charge and look at the mortgage options for you. We would see what lenders have on the market at the moment and the costs involved to remortgage.
It works pretty similarly. The details will be slightly different, but the process doesn’t really change.
How do I remortgage a fixed rate mortgage early?
The best place to start is by contacting a mortgage broker to begin exploring all the options available to you.We would complete a mortgage fact find with you, taking down details about yourself and anybody else who will be party to the mortgage.
We then request some compliance documents just to verify all the information. We come back with a complete and accurate recommendation based on your needs and your circumstances. If you are ready to proceed, we’d begin the process by submitting a mortgage application and getting the ball rolling there.
What are the pros and cons of remortgaging a fixed rate early?
The pros and cons do vary depending on your circumstances and your ideal plan when remortgaging.
But one pro can be if interest rates have dropped in the market since you secured your fixed rate. Even after paying a repayment charge it could still save you money to remortgage to a new lender. Or, you may wish to borrow more money, perhaps for home improvements. If your existing lender is unable to assist with this, you could remortgage to borrow what you are already, plus a little bit more.
The big disadvantage as I’ve mentioned is the early repayment charges. These can be significant and sometimes outweigh the pros of remortgaging.
With remortgaging, no question is a silly question. We’re always here and happy to help, even if you just wanted to run a scenario past us. Just give us a call and somebody can be on hand to assist you.
Think carefully before securing other debts against your home. Your home may be repossessed if you do not keep up with your mortgage repayments.
You may have to pay an early repayment charge to your existing lender if you remortgage.