How Soon Can You Remortgage Before Fixed Rate Ends?

When it comes to remortgaging before your fixed rate ends, careful timing is key. We recommend looking into doing this around six months before your current mortgage deal concludes.

This strategic approach ensures that your new mortgage deal seamlessly takes over just as the old one is about to end, minimising any potential disruption to your financial stability.

Understanding Fixed-Rate Mortgages

Before delving into the timing of remortgaging, let’s clarify what a fixed-rate mortgage entails. This type of mortgage offers a consistent interest rate throughout a specified term, typically two to five years. Fixed-rate mortgages provide financial predictability, making budgeting more manageable.

Can You Remortgage During a Fixed-Rate Term?

The short answer is yes, you can remortgage during a fixed-rate period. However, several important considerations come into play:

Early Repayment Charges (ERCs)

Most fixed-rate mortgage agreements include ERCs. These charges are levied if you repay or remortgage your mortgage before the fixed-rate period concludes. ERCs are typically expressed as a percentage of your outstanding mortgage balance.

The percentage often decreases as the fixed-rate term progresses, making remortgaging more cost-effective closer to the end of the term.

Timing Matters

To minimise ERCs, many borrowers opt to remortgage towards the later stages of their fixed-rate period, which typically aligns with the recommended six-month window.

As the end of your fixed term approaches, ERCs decrease, reducing the financial impact of remortgaging. However, it’s essential to factor in the time required to secure a new mortgage deal and ensure a smooth transition.

Lender Policies

Different lenders have varying policies regarding remortgaging during a fixed-rate period.

Some may allow you to start the process up to six months before your fixed rate ends, while others may have different timeframes. It’s important to consult your lender’s terms and conditions to determine their specific policies.

Market Conditions

Keep an eye on current mortgage market conditions. If interest rates have dropped significantly since you took out your fixed-rate mortgage, it may be advantageous to remortgage early, even with ERCs. The potential savings on lower interest rates can outweigh the ERC costs.

Remortgaging Benefits

Remortgaging during a fixed-rate period can offer several benefits:

1. Lower Interest Rates: If market interest rates have fallen, you may secure a new mortgage deal with a lower interest rate, reducing your monthly payments.
2. Improved Terms: You can renegotiate your mortgage terms to better suit your financial goals. This may include changing from a fixed-rate to a variable-rate mortgage or adjusting the repayment period.
3. Access to Equity: If your property’s value has increased, you can remortgage for home improvements, remortgage for debt consolidation, or remortgage for other financial needs.

The Remortgaging Process

1. Assessment: Evaluate your current mortgage terms, including interest rates, ERCs, and your financial objectives.
2. Market Research: Research different mortgage deals and lenders to identify a suitable remortgage option.
3. Application: Once you’ve selected a new mortgage deal, submit your application and provide the necessary financial documentation.
4. Valuation: Your chosen lender will assess your property’s current value to determine the loan-to-value (LTV) ratio.
5. Approval and Completion: Upon approval, your existing mortgage is repaid, and the new mortgage agreement takes effect.

Seeking Professional Mortgage Advice

Remortgaging can be a complex process with various financial implications. Speaking a qualified mortgage advisor is advisable. They can provide expert guidance, assess your specific circumstances, and help you make an informed decision regarding the timing of your remortgage.

Timing your remortgage around six months before your fixed rate ends ensures a smooth transition to a new mortgage deal. This approach allows you to minimise early repayment charges (ERCs) while taking advantage of potentially lower interest rates and improved terms.

As with any significant financial decision, seeking professional advice can be invaluable in ensuring a seamless and advantageous remortgaging experience.

Written by
Malcolm Davidson
Managing Director of UK Moneyman Ltd.
MAQ & CeRER Qualified

15th November 2023

About the Author

Malcolm Davidson

Managing Director of UK Moneyman LTD

Malcolm is one of the UK’s most well-known and respected Mortgage Advisors. He is passionate about providing a 5* customer experience and he has also trained and mentored dozens of fellow Advisors in a career that is now in its third decade.

In addition to his day to day duties as Managing Director, Malcolm still gives out mortgage advice and feels lucky that his job is also very much his hobby.

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