Remortgaging can be a smart way to reduce monthly payments, release equity, or secure a more suitable deal if better options are available. But what if you are still tied into your current mortgage? Many homeowners ask whether they can remortgage early, and the answer is yes — but there are important factors to weigh up before you decide.
When you can remortgage early
You don’t always need to wait until the end of your current mortgage term. You may be able to remortgage early if:
- Your circumstances have changed, and you want a deal that better fits your needs
- Interest rates have moved, and you want to secure a lower rate, if available
- You want to borrow more for things like home improvements or debt consolidation*
In each case, it’s worth checking whether the benefits of remortgaging outweigh the costs.
If you’re thinking about your options, our remortgaging team can help arrange the right deal for your circumstances.
*Freeing up available credit could lead to more debt. Your credit could suffer if you miss payments.
Fees to be aware of
The main cost of remortgaging early is the early repayment charge (ERC). This is a fee set by your current lender for leaving your deal before the agreed end date. ERCs are usually calculated as a percentage of your remaining loan and can range from 1% to 5%, though this can vary depending on the lender and how far you are into your deal.
Other fees may include:
- Exit fee – an administration charge for closing your account
- Arrangement fee – for setting up the new mortgage
- Legal and valuation fees – sometimes covered by the new lender, but not always
Because of these costs, it’s important to calculate whether the savings from a new deal will outweigh the upfront fees.
Options to consider
If you are thinking about remortgaging early, you have a few routes to explore:
- Porting your mortgage – Some lenders let you transfer your existing deal to a new property without paying an ERC.
- Product transfer – Staying with your current lender but switching to a new product may be simpler and cheaper.
- Wait until your deal ends – If the ERC is high, it may be worth waiting until your fixed or tracker term finishes before remortgaging.
Is it worth it?
The decision depends on your personal circumstances, the size of the ERC, and what kind of savings you could make on a new deal. For example, if you have only a few months left on a fixed rate, it may be more cost-effective to wait.
If you are unsure, speaking to a mortgage advisor can help you compare the costs and benefits. Meanwhile, MoneyHelper, who offer impartial information and guidance, have a mortgage affordability calculator* which you may find useful.
*On clicking the above link [moneyhelper], you will leave the regulated site of We Do Mortgages Ltd. Neither We Do Mortgages Ltd, nor Sesame Ltd, is responsible for the accuracy of the information contained within the linked site
Final thoughts
Remortgaging early is possible, but it isn’t always the best financial decision. By weighing up the potential fees against the savings on offer, you can decide whether it makes sense for you.
At We Do Mortgages, our team can guide you through the process and help you explore whether remortgaging early is the right step. Get in touch with us to discuss your circumstances.
Important
Think carefully before securing other debts against your property. Your property may be repossessed if you do not keep up repayments on your mortgage.
The FCA does not regulate some forms of Buy-to-Let mortgages.
