Remortgaging a Fixed Rate Mortgage Early
If you’re considering remortgaging a fixed rate mortgage early then this guide has everything you need to know about when, how and why to do it.
Firstly, what is the length of your current fixed rate deal?
No impact on your credit score
Author: Pete Mugleston - Mortgage Expert, MD
Updated: October 12, 2022
Whether you’re looking to remortgage early to get a better rate, because you want to borrow additional money or you want to switch lenders, it’s important to weigh up the pros and cons of remortgaging and to consider the costs as well as the benefits.
In this article we’ll look at when you can remortgage a residential or buy-to-let mortgage, what penalties you might incur by doing it early and how a broker can help you decide the right course of action.
The following topics are covered below...
How soon can you remortgage a fixed rate mortgage?
Most lenders require you to have been registered on the title deeds for six months before you can remortgage but a broker can help you find an appropriate lender if you need to remortgage less than six months in.
After six months you will have a lot more flexibility and can normally opt to remortgage at any time as long as you can pay the associated costs.
A fixed rate mortgage is, as the name suggests, set at a specific rate of interest for a fixed term, normally two, three or five years, although sometimes longer.
In return for the protection against interest rate rises, fixed rate mortgages have an early repayment charge, payable if you remortgage before the end of the fixed rate term.
Making changes to your mortgage during the term
If you expect interest rates to rise and can see the benefits in remortgaging to a new fixed rate deal sooner rather than later, it’s important that you consider exactly how much that might cost.
Get Started with a Broker
Maximise your chance of approval with specialist advice from an expert in Remortgages.
How much does it cost to remortgage early on a fixed rate?
There are several costs that you could face, the largest usually being the lender’s early repayment charge (ERC). The ERC is calculated as a percentage of the loan, normally between 1-5%. For example if you had a £200,000 mortgage and the repayment charge was 3%, you would have to pay £6,000.
The percentage often reduces depending on how much of the fixed rate term you have remaining, so you may pay less if you’re closer to the end.
You may also have to pay an exit fee, which is a set admin fee for ending the mortgage, the arrangement fee on the new mortgage and potentially legal costs if you are changing lenders.
You may also be liable for the cost of a valuation, although many lenders will cover some of these costs as an extra incentive for switching.
Extending your term
If you want to make changes to your existing mortgage within a fixed rate term your first step is to contact your lender and explain your situation.
Some may be happy to make changes such as increasing the length of the overall term without it impacting the other conditions of your mortgage, but this varies between lenders.
Remember that even though you reduce our monthly repayments by extending the term of your fixed rate mortgage, you will normally end up paying more overall.
Normally adding extra borrowing by releasing equity will mean a remortgage, leaving you with the fees described above, but there may be other ways to work around it though without having to remortgage, depending on what it is that you want to do.
Another option is something called a further advance, where you borrow extra money from your current mortgage lender, but as an add on, with a separate rate to your existing mortgage. This could be a good idea if remortgaging is too costly and you want to keep your existing deal.
Why you should speak to a broker if you need to remortgage early
Remortgaging early is a big decision, and it’s sensible to have expert support to help you get the best deal and minimise costs.
A broker who specialises in remortgaging will be able to speak to both your new and existing lender and work out exactly what the remortgage is going to cost you versus any potential longer term savings or other benefits.
If you decide that remortgaging early definitely is the best option for you then your broker will be able to find you the best rates on a new mortgage and hopefully save you money overall.
They will have access to a lot of deals that otherwise aren’t easy to find and with their existing relationships with lenders they may also be able to negotiate on your behalf.
Our Broker-Matching Service Guaranteed!
We want you to have complete confidence in our service, and get the best chance of securing your mortgage. We guarantee to get your mortgage approved where others can’t – or we’ll give you £100*
Which lenders will let you remortgage early?
It isn’t a given that every lender will allow you to remortgage at any time. Some may have restrictions in place if the loan is below a certain value or if you’re very early on in the contract.
Your reason for remortgaging could also impact your options as some lenders will impose different maximum LTVs depending on what you’re remortgaging for.
You’ll need to make sure you have enough equity in your property to be eligible to remortgage.
Some lenders may waive the ERC if you are remortgaging with them – known as a product transfer – although this significantly limits your options and may mean you end up settling for a less competitive rate.
This is where a broker is invaluable, as they’ll be able to compare deals across the whole of the market.
Refinancing a fixed rate buy-to-let property
Remortgaging a fixed rate buy-to-let early follows a similar process to a residential property.
Contacting your current lender is a good first step to make sure that you’re able to remortgage, then find a broker who specialises in buy-to-let remortgages to help you explore your options and get the best deal.
Excellent service, thanks you very much!
Great- would recommend 👍🏻
Great, 5 star efficient service. Would recommend
Prompt, pleasant, thorough!
David was prompt helpful and thorough. Our case was particularly challenging and he still managed to secure a good deal for us!
Get matched with a remortgage specialist
Remortgaging early can be expensive, but with the help of a broker specialising in remortgages you should be able to keep fees as low as possible and hopefully find yourself better off long term.
Give us a call now on 0808 189 0463 or make an online enquiry and we’ll assess your circumstances and match you with the advisor that’s best suited to your needs.
Our broker matching service is free of charge and there’s no obligation, so let us arrange a chat with a broker and see what a difference they could make.
Ask A Quick Question
We know everyone's circumstances are different, that's why we work with mortgage brokers who are experts in all different mortgage subjects. Ask us a question and we'll get the best expert to help.
Mortgage Expert, MD
About the author
Pete, an expert in all things mortgages, cut his teeth right in the middle of the credit crunch. With plenty of people needing help and few mortgage providers lending, Pete found great success in going the extra mile to find mortgages for people whom many others considered lost causes. The experience he gained, coupled with his love of helping people reach their goals, led him to establish Online Mortgage Advisor, with one clear vision – to help as many customers as possible get the right advice, regardless of need or background.
Pete’s presence in the industry as the ‘go-to’ for specialist finance continues to grow, and he is regularly cited in and writes for both local and national press, as well as trade publications, with a regular column in Mortgage Introducer and being the exclusive mortgage expert for LOVEMoney. Pete also writes for OMA of course!