How soon can you remortgage before fixed-rate ends?
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How soon can you remortgage before fixed-rate ends?
Can you remortgage a fixed rate mortgage early? How soon can you remortgage before your fixed rate ends?
A remortgage is moving your mortgage to a different lender. We can arrange a remortgage on your fixed rate early, so that you move your mortgage to a new lender once your existing deal expires.
You don’t generally want to remortgage until you’re out of a fixed rate period because you may incur early repayment charges.
Typically, we can start arranging things at least six months beforehand as most mortgage providers will give you a mortgage offer that lasts for six months. We will always look at that timeframe with your existing deal anyway, to examine if it’s better to stay with the existing lender or actually move your mortgage if you will make a significant saving.
What happens when you re-mortgage a fixed rate mortgage early?
If you remortgage early and you’re tied into a fixed rate deal with your existing provider, you may incur early repayment charges – and you don’t want to do that. Why would you want to pay thousands of pounds to break an existing deal?
On the rare occasions that it does need to happen, if someone was getting divorced for example, we would approach the existing lender. We’d explain that we need to take one partner off the mortgage. They will ask if the other person can afford the mortgage on their own – if so, we then help arrange that.
If the answer is no, we would typically look at a Comprehensive panel, with many High Street and specialist lenders. We need to work sensitively when someone’s divorcing, as often people don’t want anything to do with their ex-partner, especially a mortgage as a joint financial commitment could affect their credit score. This is something we’ve worked on a few times.
What happens if I do not remortgage when I get to the end of my fixed rate?
When you come to the end of the deal after two, three, five or 10 years – and there are now 40 year deals, believe it or not – you move on to the standard variable rate. That’s the lender’s default rate.
You don’t want to move on to that. You might be coming off a fixed deal of 1.15% or 2.3% or 2.5% and standard variable rates can be as high as 8.79%. It’s just a waste of money. [podcast recorded in February 2024]
Don’t do that – come to us, and we can approach your existing lender for a new deal at the very least.
Are there any exit fees that apply or any other costs involved?
If you’re remortgaging out early, such as in that divorce case we mentioned, you may have early repayment charges. The lender will charge you a percentage to leave, depending on how far you’re into the deal.
When leaving at the end of your deal, some lenders may charge a release fee or a mortgage transfer fee. There can be legals too or valuation fees, but with remortgages most lenders provide free legal packages – so there shouldn’t be too much cost involved.
What options do I have when remortgaging a fixed rate mortgage early?
Again, it depends on the circumstances of why we’re remortgaging early. If you’ve got a deal that is expiring, we would go to your existing lender, see what they can do and examine it against the market.
We present you with the cost savings and, as long as you’re eligible, we will then help you remortgage. You’ve got plenty of options. It’s like getting your first mortgage again and advising you on a new product.
We’ll go through the same checks, get your credit report and your income, see if anything has changed and then search the market to look at the options.
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Can I remortgage my fixed rate mortgage early if I have bad credit?
It really does depend on what you define as bad credit. Are we talking about one or more missed payments or a county court judgement?
You can remortgage early, but the lender that we go to has to accept your credit profile. Again, we do a lot of research behind the scenes. Perhaps we arranged your mortgage two years ago and your circumstances have now changed. Your credit was great then but now something has happened and you have bad credit.
That could limit your options to move lenders. Another lender may have a superb deal but you may not be able to move to them because of your credit.
You can remortgage with bad credit, depending on what the issue is. But we can also look at options to stay with your current lender if that will be better for you.
Can I remortgage my fixed rate Buy to Let property early?
Yes – we would follow the same process. Typically six months beforehand we’d have a look at your options. We will look at the rent coming in and the affordability. We’ll see what your existing provider is offering against the market and see if you’re eligible for those deals.
We’ll present you with the options and then look to arrange a new fixed rate deal, hopefully making significant cost savings.
How do I go about remortgaging a fixed rate mortgage early?
Around six months before your mortgage deal is coming up to expiry, get in touch with us. That allows us plenty of time to look at the options for you. If you’ve arranged a mortgage through us, we proactively will call you six months before your mortgage is due to end.
We will ask you if there are any changes you need to make – to borrow any money, or if someone is coming off or joining the ownership, or whether you want to change methods of repayment.
We then go away and do some research and come back with cost differences. Together we’ll see if it’s worth you remortgaging to a new deal or it’s better to stay with your existing provider. We’ll then apply for you and take you through the whole process.
What are the pros and cons of remortgaging from a fixed rate mortgage early?
Being organised gives you a lot of peace of mind, doesn’t it? I could describe moving a mortgage as like turning a cruise ship. It’s not a quick turn, like in a car or on a bike.
Remortgaging is slower because you’ve got solicitors and lenders involved. Getting all the information together makes it like that cruise ship – it will probably take half an hour to actually turn. So give it some time and you could benefit from that.
The pros of remortgaging a fixed rate are that you can secure a better deal. You’ve got peace of mind – everything’s all organised. We can do the solicitors’ paperwork and arrange a completion date for the future – so that cruise ship is just sailing nicely into the sunset.
You have demonstrated how a mortgage broker like Mortgage Advice Point can help – is there anything else we need to know?
If you’re coming to the end of your fixed rate deal, get in touch with a good mortgage advisor. They will advise you honestly on whether it’s best to stay with your existing provider or to change lender at that time.
We’re recording this in February 2024 and we’ve been busy redoing remortgage work. With rates rising last year we had to advise some customers not to go ahead with a remortgage. Even up until the day that your new rate will start, we might advise you to stay with your lender because they are now providing a better rate.
It’s almost like deciding to stay on that cruise ship, not getting off at one of the islands, and enjoying the buffet instead.
At the heart of it, if someone is saving £20 a month, they are saving hundreds of pounds over two or three years. Ethically, we want you to know the possibilities. You shouldn’t remortgage for the sake of it, if your existing provider can do the same thing.
Typically, up until two weeks before your switch we will examine everything and make sure it’s right for you. If you’ve had to change your circumstances – you’re borrowing more money, for example, you will probably carry on with the remortgage. But if you’re just switching rates we make sure that you are on the most appropriate deal to save money.
THINK CAREFULLY BEFORE SECURING OTHER DEBTS AGAINST YOUR HOME. YOUR HOME MAY BE REPOSSESSED IF YOU DO NOT KEEP UP WITH YOUR MORTGAGE REPAYMENTS.
YOU MAY HAVE TO PAY AN EARLY REPAYMENT CHARGE TO YOUR EXISTING LENDER IF YOU REMORTGAGE.
A fee for our service is charged. This is typically £495 but the exact amount will be dependent upon your circumstances and we will discuss this with you.
Right to Buy is for tenants in England, Wales and Northern Ireland who rent their home from their local council.
It allows tenants who qualify, to buy their home at a discount.
The size of the discount varies depending on where you live and the type of property you want to buy.
Tenants who were living in a council home before it transferred to another landlord such as a housing association, might be eligible to buy their home under the ‘Preserved’ Right to Buy or Right to Acquire schemes.
Usually, tenants must have rented from the public sector (i.e., local council, housing association, armed services, NHS or foundation trust) for three years before they can buy under these schemes.
The three years can be non-consecutive. So, you could still qualify if you rented from the private sector between times when you rented from the public sector.
A concessionary purchase is a term for a property that is bought for less than its market value and, as you can probably guess, concessionary mortgages can be used to buy a property that’s sold at a discount.
Some concessionary mortgages are easier to get than others. Mortgages involving family members are much easier to get than if a buyer was purchasing from a private seller.
Here’s an example of how concessionary mortgages work. Imagine your parents want to help you onto the property ladder. To do so, they offer to sell you a property they own at a discounted price.
With the increase in property prices. The bank of mum, dad or even grandparents could come to the rescue.
With this type of mortgage, a parent or close family member takes on some of the risk of the mortgage by acting as guarantor. If the homeowner misses a payment, this person is responsible for covering the missed payment.
The main benefit of this type of mortgage is that you can sometimes borrow up to 100% of the property’s value as the guarantor’s collateral is used in place of a deposit. This can make them an attractive option for young people or lower earners.
On the negative side, your guarantor could be liable for any shortfall if your property has to be repossessed and sold.
The guarantor can’t be just anyone. Most lenders will require this person to be a close family member – usually a parent.
Becoming a guarantor is a big commitment. The lender will either hold some of the guarantor’s savings in a locked account or take legal charge over a portion of their property to secure the mortgage.
Joint Borrower, Sole Proprietor (JBSP) JBSP mortgages are a type of mortgage where not all parties to the mortgage are the legal owners of the property. For instance, if there are two borrowers in this scenario, both will be liable for the mortgage but only one will be named on the title of the property.
These mortgages allow parents, guardians, friends or family to support would-be first time buyers with the affordability challenge of getting on the housing ladder.
Shared ownership is where you buy a share of a home from the landlord, who is usually the council or a housing association, and rent the remaining share.
You need a mortgage to pay for your share, which can be between a quarter and three-quarters of the home’s full value.
You then pay a reduced rent on the share you don’t own.
Later you can choose to buy a bigger share in the property up to 100% of its value.
Eligibility restrictions on the shared ownership have lifted. You could buy a home through Help to Buy: Shared Ownership in England if:
• you have a household income of less than £80,000 (outside London) or £90,000 (inside London)
• you are a first-time buyer, you used to own a home but can’t afford to buy one now or own an existing shared ownership property but are looking to move.
Only military personnel get priority over other groups. The scheme will apply across England.
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