Can I remortgage before the end of my fixed term?

If you're a homeowner in the UK considering remortgaging before the end of your fixed term, you're not alone. The idea of potentially reducing your monthly payments or unlocking equity can be enticing, but it's important to understand the implications before making a decision.

In this article, we'll explore the pros and cons of remortgaging before the end of your fixed term, discuss the options of staying with the same lender or switching to a new one, and offer valuable advice for making an informed choice.

The advantages of remortgaging early

You could save money

Remortgaging could allow you to secure a lower interest rate, potentially reducing your monthly payments and overall mortgage costs.

You could access equity

If your property has increased in value, remortgaging can provide an opportunity to release equity for home improvements, investments, or other financial needs.

Gain financial flexibility

Switching to a new mortgage deal might offer more flexible terms, such as overpayment options, underpayment periods, or payment holidays.

Things to consider when leaving a mortgage deal early

You may need to pay an Early Repayment Charge

Many fixed-rate mortgages come with ERCs if you repay your mortgage early. These charges can end up costing you more than what you may save from a lower interest rate.

The costs involved in remortgaging

Remortgaging involves various costs, including arrangement fees, valuation fees, legal fees, and more. It's important to calculate whether the savings outweigh these expenses.

The credit checks and affordability assessments

A new lender will assess your creditworthiness and affordability, which could lead to a declined application if your circumstances have changed since the initial mortgage.

Should I remortgage with the same lender or switch?

Think of your mortgage as a long-term relationship with your lender. Over time, circumstances change, and you might wonder: is it time to reignite the flame or find a new partner?

Refinancing with the same lender can offer several advantages. Firstly, they already know you. This familiarity can sometimes lead to smoother transactions and possibly even faster approval processes. You’ve built a track record with them which can be leveraged for better deals or reduced fees. However, loyalty doesn't always guarantee the best rates.

Sometimes, the most enticing offers are reserved for new customers to attract them. Always check if your existing lender is willing to match or beat competitive rates from other institutions.

Staying loyal can have its perks, but it's essential to ensure you're still getting the best deal. Always be open to negotiations, and always compare the market.

Do I need a solicitor to remortgage with the same lender?

Just as you'd consult with an expert before making any significant life decisions, remortgaging, too, comes with its set of expert opinions.

In most instances, if you're remortgaging with the same lender and not adding anyone else to the mortgage, you may not need a solicitor. This is commonly known as a "product transfer." However, if you’re making substantial changes, such as borrowing more money, refinancing to a new lender, or changing the property's ownership, a solicitor's guidance might be beneficial. They ensure that all legalities are correctly handled and that you’re making informed decisions.

You may find that a new lender will sweeten the deal by offering free legal advice via their in-house panel of solicitors. Or, they might offer a cash allowance to choose an external solicitor of your choice. If you do switch mortgage lenders, make sure to ask your mortgage broker if the deal comes with legal perks such as these.

Keep it simple! If you're merely switching mortgage products with the same lender, you might save on solicitor fees. However, for more complicated changes, professional advice can be priceless.

Is it worth switching mortgage lenders?

Is the grass always greener on the other side? When it comes to mortgages, it could be.

Switching mortgage lenders might sound daunting, but it can have its advantages. A new mortgage lender might offer you better interest rates, more flexible terms, or perks that your current lender doesn't provide. Moreover, a change can cater to your evolving financial situation better than sticking with the status quo. But, switching might also come with costs such as early repayment charges from your current lender or fees from the new one. Always weigh the potential savings against these costs to determine if the switch truly benefits you.

Exploring new horizons can be beneficial. If you find a deal that better suits your needs, switching might be the smart financial move. That's why we always recommend speaking to a mortgage broker.

What happens when you remortgage with a different lender?

Imagine moving to a new city. It’s a mix of exciting opportunities and the logistics of the shift. Similarly, remortgaging with a new lender brings prospects and processes.

If you decide to remortgage with a different lender, you’ll repay your current mortgage with the loan from the new lender. The application process will be similar to when you got your first mortgage: expect credit checks, affordability assessments, and property valuations. While this may seem repetitive, remember that this is a new lender, and they need to assess the risks associated with lending to you. Once approved, the new lender will handle most of the switch's logistics, but always keep yourself informed and involved.

While the process might sound tedious, the potential benefits of a better deal, more flexibility, or improved financial conditions can make the transition worth it.

Remortgaging might seem complex, but it's just about finding the right fit for your financial needs. Whether you choose to stick with your current mortgage provider or venture out to explore new options, always prioritise what's best for your financial health and long-term goals. Remember, it’s not just about the now; it’s about securing a comfortable future.

To compare the latest mortgage deals, you can utilise our free mortgage comparison tool. Similarly, if you're not quite ready to apply for a new mortgage just yet, sign up for our free Mortgage Rate Tracker. You'll receive fortnightly emails highlighting the average and best mortgage deals for people with similar loan-to-values (LTV) as you.d to negotiate on terms compared to a new lender looking to gain a new customer.

So what should you do?

Before you opt to remortgage before the end of your fixed term, carefully assess your financial situation and objectives. Calculate the potential savings against the costs, including ERCs and fees. Consider whether your circumstances have changed since your initial mortgage application, as this could affect your eligibility with a new lender.

If you're considering staying with your current lender, don't hesitate to negotiate for better terms or reduced fees. However, if switching to a new lender seems more beneficial, be prepared for a more complex process and higher initial costs.

Ultimately, seeking advice from a mortgage broker or financial advisor can provide personalised insights based on your situation. Remember that remortgaging is a significant financial decision, and taking the time to thoroughly research and analyse your options will help you make the right choice for your long-term financial well-being.