Leaving a Fixed-Rate Mortgage Early

Fixed-rate mortgages usually last for an initial period of two, three, or five years, and sometimes longer. However, for many reasons, you may want to get out of your mortgage before that initial period has elapsed.

If so, we’ll explain the best approach to take, the drawbacks to consider, and some alternatives that might be available to you.

Can you get out of a fixed-rate mortgage early?

Yes, you can, but there are usually fees involved. So, if your goal is to save money, it’s not always viable to leave the mortgage early. You’ll need to check with your mortgage lender to find out how much it will cost and see how that compares to the potential savings.

Fees for leaving a fixed-rate mortgage

When you leave your fixed-rate mortgage, the following charges, fees, and other costs may apply:

Remortgaging before the end of your fixed term

It is possible to renew your mortgage early, usually with caveats, such as the fees outlined above. Often, you’ll be considering leaving your fixed-rate mortgage because you want to remortgage with a different lender or product, usually to get a better rate. If mortgage rates are rising and you’re close to the end of your fixed-rate term, you may want to leave early to lock in a new fixed rate before it increases.

Once you’ve taken into account the fees and other costs, you may find it’s cheaper to wait until the end of the fixed-rate period than to switch now. If you’re not sure which option will be cheaper in the long run, you should seek expert advice.

Other reasons to leave a mortgage early include:

• To sell your home and move elsewhere
• To remove someone from a joint mortgage
• To release equity to pay off debts or make home improvements
• To pay off your remaining balance

Waiting may not be an option in some of these cases. The right mortgage broker can help you to exit now as cheaply as possible.

Which lenders charge early repayment fees?

Most of them charge these fees for at least some of the products in their range, although there are circumstances where they might waive them.

Below, we’ve listed information on the ERCs charged by some of the major mortgage lenders:

• NatWest: You will be charged an amount equal to 58 days of interest on your current loan amount. If there is less than one year left of your fixed-rate period, the charge will be 28 days’ interest.
• Barclays: Barclays early repayments charges differ for different products, so you’ll need to consult your paperwork.
• Lloyds: Lloyds usually charge between 1% and 5% of what you still owe on your mortgage. The charge will vary depending on which product you have.
• Nationwide: The ERC is up to 7% of the remaining loan amount, depending on the product.
• Virgin: The ERC can be either a percentage of the original loan amount or the remaining loan amount. You’ll need to consult your paperwork.

Please note that the above information was correct at the time of writing (August 2022) but all mortgage criteria is subject to change.

How to get out of a fixed-rate mortgage early

To keep your costs as low as possible, we’d advise you to take the following steps:

Speak to broker who specialises in fixed-rate mortgages

It’s not an easy decision to leave a fixed-rate mortgage early. On the contrary, it can be difficult to know if this move will save you money over the long term. It may put your mind at rest to speak to a mortgage broker who has significant experience with situations like yours.

If you’d like, we can put you in touch with one of the numerous qualified brokers we work with for a free, no-obligation chat. We match people with brokers based on their personal circumstances and who is best able to help. To start the matching process, give us a call on 0808 189 0463 or enquire online.