Generally speaking as a homeowner, if you’re not looking to sell your home and move (and you’re on a fixed period), you will probably look to remortgage your home around 3 months before your initial fixed period is due to end.
Whilst this is prior to its actual end, it is not considered remortgaging early, as your remortgage process will generally take up that time frame; you’re not getting everything finalised that very day.
Though this is standard practice for many, there are some that may wish to remortgage earlier than this, perhaps 6 months to a year before their deal is about to end.
This brings us to the question surrounding the topic; Can I remortgage early? Well yes, you can. There is nothing to legally prevent you from remortgaging early. That doesn’t mean that you should though.
There are usually 3 different types of mortgage you will choose from when you come to remortgage. This includes tracker mortgages, discount rate mortgages and the most popular by far, fixed-rate mortgages.
Tracker mortgages follow the Bank of England base rate, which means when they are low, they’re great, but when they are high, they can be costly. They of obviously not fixed because of how they function, though you can have “collared” rates, meaning they don’t go below a certain number.
Discount rate mortgages are a type of variable rate mortgage. They are usually offered to you by your mortgage lender, as a discount of their own standard variable rate mortgage.
Fixed-rate mortgages are of course the most popular of the 3. They allow you to fix in to a particular interest rate, for the chosen amount of years (typically 2-5 years).
Whilst the downside could be a drop in interest rates leaving you paying more, you are more likely to reap the benefits of a fixed-rate, as those rates are more likely to go up.
Homeowners may look to remortgage for a variety of reasons. To remortgage onto a better rate, to fund any potential home improvements, to consolidate debts and more.
All of these can be achieved within the 3 month period prior to your deal ending, so why would you remortgage early?
Though you can remortgage to move onto a better rate when your fixed deal is about to end, there may be times when you wish to take action much earlier.
For example, if you were on a particular deal that meant you were paying a higher rate of interest than you could have access to, you might want to switch early.
This will most likely come with Early Repayment Charges, but it could be that the savings you’d make on switching, would outweigh those charges.
The way the market tends to go, this is more likely to be the case.
You could easily just remortgage at the end of your fixed period and stick with the interest rate at that point, but over the 2-5 years you were fixed in, it might’ve risen by 2-3%, maybe more.
In an instance where perhaps you are still only a year away from being able to remortgage without a charge, you may deem remortgaging early worth the costs, to get an additional 2-5 years of a much lower interest rate.
Some may even look to do a debt consolidation remortgage at a point like this, to put all unsecured debt into one more manageable monthly payment.
This can of course mean more money being paid overall, but could free up more income per month to put towards bills and other necessities.
You should think carefully before securing other debts against your home. By adding your unsecured debts to your mortgage, which is secured on your home, you are potentially putting your home at risk if you cannot make the required repayments.
Although the total monthly cost of servicing your debt may have reduced, the total cost of repayment may still have risen as the term of your mortgage is longer than it may have taken to repay the debts originally.
The reason why you might not want to remortgage early, as touched upon in previous points, is due to the early repayment charges that are present. The extent of these costs depend on how early into your term you are.
Generally, you can expect to pay less the closer to the end of your initial fixed period you are. Of course for tracker mortgages, there isn’t a fixed-period per se, though there will likely be an introductory period of which you may incur a fee.
These costs are usually very expensive, which is why most people will want to avoid them. As discussed though, it may be worthwhile to save money in the long run.
It is always worth speaking to your mortgage lender prior to this, to make sure you are aware of any early repayment charges you could be faced with, if you were to exit your deal early.
At the end of the day, this is entirely your choice. If you feel like doing so will benefit you in the long run, then by all means go ahead. Just always be wary of the costs involved and speak with a qualified professional to make sure it is the best option for you.
You can remortgage early by booking your free remortgage review with a trusted mortgage advisor today. They will be able to provide expert remortgage advice and find you the most appropriate deal for what you’re looking to achieve.
If you’re looking to remortgage for another purpose, you may benefit from reading our articles “How to Remortgage to Release Equity?” and “Can I remortgage with the same lender? Product Transfer Advice.”