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Remortgaging early means leaving your current mortgage deal before it ends. We look at whether it’s possible, the costs involved and the reasons why people do this.
KEY INFORMATION
Get fee-free remortgage advice from the award-winning expert advisers at Mortgage Advice Bureau.
Your home may be repossessed if you do not keep up repayments on your mortgage.
Please note some branches of Mortgage Advice Bureau may charge a fee for mortgage advice if you go direct. The fee is up to 1% but a typical fee is 0.3% of the amount borrowed. So make sure you use this site, this form or phone number for fee-free advice.
There are a number of reasons why people may choose to remortgage while they’re in the middle of a deal, even if it means they have to pay an early repayment charge. These include:
Remortgaging to release equity from your home involves taking out a bigger loan against your property in order to free up some of the cash you’ve built up in it.
Whether or not you’ll be able to do this will depend on your personal circumstances including the amount of equity you have in your property. You can work this out by using our handy mortgage equity calculator.
You may also want to investigate alternatives to remortgaging to release equity, such as borrowing more from your current lender with a ‘further advance’. This would mean you wouldn’t need to remortgage but it’s important to compare the overall costs and pros and cons of your different options to make sure you make the right decision for you. It’s a good idea to get advice on this from a mortgage broker.
Get fee-free mortgage advice from the award-winning expert advisers at Mortgage Advice Bureau.
Whether remortgaging to release equity is right for you will depend on your circumstances. So it’s a good idea to discuss your options with a mortgage broker.
The amount an early repayment charge will cost will depend on the size of the mortgage and the rate charged by a lender.
However, here are some examples of how much it could cost if you have a mortgage balance of £200,000, depending on the ERC rate.
| Early repayment charge % | Early repayment charge £ |
|---|---|
| 2% | £4,000 |
| 3% | £6,000 |
| 4% | £8,000 |
This illustrates why it’s important to calculate the exact cost of remortgaging early before you start the process.
If your mortgage has an ERC it will be stated clearly in the ESIS document you were given with your mortgage documents, which details the key features and risks of the mortgage. Your annual mortgage statement should also set out any applicable ERCs at the date of each statement.
Get fee-free remortgage advice from the award-winning expert advisers at Mortgage Advice Bureau.
Your home may be repossessed if you do not keep up repayments on your mortgage.
Please note some branches of Mortgage Advice Bureau may charge a fee for mortgage advice if you go direct. The fee is up to 1% but a typical fee is 0.3% of the amount borrowed. So make sure you use this site, this form or phone number for fee-free advice.
The pros and cons of remortgaging early may include:
| Pros | Cons |
|---|---|
| Releasing equity, such as to fund home improvements | Early repayment charge |
| Consolidating debts | Remortgage fees such as arrangement fees |
| Accessing a better rate | Affordability checks for new mortgage |
| May help fund major expenses without taking out a separate loan | May not save money overall |
Whether remortgaging early is worthwhile depends on your circumstances.
It may be worth considering if:
• You want to release equity from your home, such as to fund home improvements.
• You want to consolidate debts.
• You can secure a significantly lower interest rate.
• You’re approaching the end of your current mortgage deal.
Because every situation is different, it’s important to calculate the overall cost before deciding whether to remortgage early.
For example, if you’re considering remortgaging early, you may need to factor in:
It’s a good idea to discuss your options with a mortgage broker before making a decision.
Our Mortgage Expert Sarah Tucker says:
“While an ERC can feel like a penalty, it shouldn’t automatically put you off exploring your options.
The key is to look at the overall financial picture, not just the fee itself. Before making a decision, it’s worth speaking to a mortgage adviser who can help you understand the costs involved, assess your options and work out whether remortgaging early is the right move for your circumstances.“
Yes, you can usually remortgage early with the same lender. When you take out a new deal with your current lender, this is known as a product transfer.
If you want to switch to a new mortgage while you’re tied into a deal, you may still be subject to an early repayment charge. However, if you’re in the last few months of your deal, your lender may waive this fee.
Remortgaging with your existing lender is usually quicker than switching to a new lender because a mortgage valuation and legal work is not usually required and affordability checks may be more limited.
However, this will mean you will be limited to the mortgage deals your current lender offers. So before doing this, it’s a good idea to get fee-free advice from a mortgage broker who can search the market for you so you have sight of all your options.
If you’re currently in a fixed-term mortgage, you can start the remortgage process up to 6 months before it ends. This means you can lock in a rate and have your new deal set up so that it starts as soon as your current deal ends.
This also means you avoid the risk of having to pay an early repayment charge – although check the date of your remortgage carefully to make sure.
Mortgage offers are typically valid for between three and six months. If you secure a mortgage offer early, it’s important to keep it under review as better rates may become available before your current deal ends.
If your current mortgage deal is coming to an end, the best time to start the remortgage process is up to 6 months before it expires. This means you’ll have time to shop around for a new deal, lock in a rate and keep it under review.
However, if you’re planning to remortgage early, the best time to do this will depend on your circumstances. So it’s a good idea to discuss this with a mortgage broker.
Get fee-free remortgage advice from the award-winning expert advisers at Mortgage Advice Bureau.
Your home may be repossessed if you do not keep up repayments on your mortgage.
Please note some branches of Mortgage Advice Bureau may charge a fee for mortgage advice if you go direct. The fee is up to 1% but a typical fee is 0.3% of the amount borrowed. So make sure you use this site, this form or phone number for fee-free advice.
Find out more information in our guide How long does it take to remortgage?
It’s a good idea to start the remortgage process up to six months before the end of your mortgage deal is due to finish.
One advantage of starting the remortgage process early is that you should be able to go straight from one deal to another, without having to move onto your lender’s standard variable rate, which could be expensive.
Also, by locking in a rate early you’ll be protected in case mortgage rates increase, and you’ll be able to keep the rate under review in case a better deal comes up before you need to complete. Get fee-free mortgage advice from the award-winning expert advisers at Mortgage Advice Bureau.
There are no limits on how often you can remortgage your house, however, it’s a good idea to speak to a mortgage broker as they will make sure you make the most suitable decision for your circumstances.
If you’re remortgaging with a new lender, they will usually instruct a surveyor to carry out a mortgage valuation survey to establish its current market value. However, if you remortgage with the same lender (a product transfer) a valuation will not usually be carried out.
You may be able to remortgage to pay off debt, depending on your circumstances. This would involve remortgaging to release equity from your home.
But it’s not a decision to take lightly. It involves taking out a larger mortgage and there may be significant costs involved. So it’s a good idea to get expert advice. Find out more information in our guide Can I remortgage to pay off debts?
You won’t typically need a solicitor if you’re remortgaging with the same lender, known as a product transfer. However, you will need a solicitor if you’re remortgaging with a new lender. Read more in our guide Remortgaging: do I need a conveyancing solicitor?
Yes, it is usually possible to remortgage early while you’re on a fixed rate mortgage but in most cases you’ll have to pay an early repayment charge (ERC) if you leave before the end of your fixed term. This may also be the case if you’re in a tracker or discounted variable rate deal. So make sure you check the terms of your deal.
There isn’t a specific early remortgage calculator as it will depend on your circumstances.
To calculate the cost of remortgaging early, you’ll need to factor in any costs of leaving your current deal and the costs of taking out a new mortgage. A mortgage broker can do this for you.
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