Discover if you can remortgage early and why you may decide to do so in this article. Learn all about remortgaging to make an informed decision.
Are you nearing the end of your mortgage’s fixed-term period? Maybe you’ve seen better deals available from other lenders? If so, you may be considering if you can remortgage early. Your mortgage may be your biggest monthly expense, but swapping to a new lender with preferential rates could help.
Norton Finance may be able to help you lower your monthly mortgage payments if you remortgage with us. This article will detail why you may decide to remortgage, how early you can do it, the pros and cons involved and how often you can remortgage.
Can I remortgage early?
In short, yes, you can remortgage early. Technically you can remortgage at any time, but it makes sense to do so when you can make it work to your advantage.
A remortgage is when you change the mortgage you have on your home. Typically, you’ll be offered a mortgage deal that offers a fixed rate that will last two to five years. After that period is up, your mortgage with your current lender will typically move to a Standard Variable Rate (SVR) – which may work out more expensive.
People often decide to remortgage to a preferential rate or better mortgage terms. But remortgaging isn’t always a straightforward decision, as there are lots of factors to consider. In most cases you’ll face repayment fees and exit charges, so you need to weigh these up against the potential savings. You’ll need to do a lot of research and may even wish to seek help from a mortgage advisor.
How to start remortgaging
First of all, you need an Agreement in Principle as an indication of how much you could borrow for a remortgage. Then you can apply with your chosen lender online.
When can you remortgage?
You can remortgage at any time. But it’s recommended you think about remortgaging three to six months before your mortgage deal ends. Knowing your fixed rate is about to switch to an SVR could be enough incentive for you to consider a change. Plus, this timeframe allows you to explore your options before your current deal expires, so you don’t rush into the first remortgage deal you find.
How early can you remortgage?
Most lenders will let you remortgage to a new deal after your name is registered on the title deeds for six months. If you wait until after six months, you’ll also have a better choice of remortgage products. Remortgaging sooner than three months in can have a negative effect on your credit score, and may not look great on a mortgage application.
How often can you remortgage?
There’s not usually a limit on the number of times you can remortgage your property. In fact, many homeowners remortgage multiple times as personal situations change and interest rates fluctuate. Just remember that your applications must meet each specific mortgage lender criteria that you apply for.
What are the pros and cons to remortgaging?
When it comes to remortgaging, there’s a lot to consider. It’s not a decision to rush into, and it can be helpful to seek financial advice before you start. Here are some of the main pros and cons to consider when remortgaging:
What are the pros of remortgaging?
- To secure a better rate – you may be able to switch to a better deal to secure a more favourable rate.
- Reduce your monthly payments – by switching mortgages to a lower rate you may be able to lower your monthly payments.
- Gain control over your finances – if you swap onto a fixed rate mortgage, you can plan ahead knowing your mortgage payments are set for the next two to five years.
- You need more flexibility – you may decide to swap your mortgage to one that offers more flexibility – like payment holidays.
- Lower the Loan-to-Value (LTV) on your mortgage – if your property increases in value and your LTV reduces, you may qualify for better mortgage rates.
What are the cons of remortgaging?
- Early repayment fees – if you’re looking at remortgaging with a new lender, you may face early repayment charges. This may be between 1% and 5% of what you still owe.
- You’ll need to pass eligibility checks – if you go with a new lender, you’ll be classed as a new applicant. This means you’ll need to go through checks and supply paperwork.
- Extra costs – if you remortgage with the same lender, you may just need to pay a redemption penalty to sever your current deal. But if you move lenders, you will also need to consider a property valuation and legal fees.
- You’re already on a good rate – you may already have a great mortgage deal, better than you’d find elsewhere. In this case, you may decide to stay put for now.
Remortgaging with a fixed term mortgage
A fixed term mortgage is where your repayments have a fixed interest rate for a specified period of time – often two or five years. Once this period has ended, your rate will rollover onto your lender’s SVR.
When deciding whether to go for a fixed rate mortgage, you’ll need to consider how long you’re planning to spend in your new home before moving, as well as how you’d expect interest rates to fluctuate over that time frame. You can remortgage with a fixed term, but you will likely be subject to early repayment charges and exit fees. You’ll need to calculate the money you’d save by switching, against the cost of leaving your current deal.
Can you remortgage with the same lender?
Yes, you can remortgage with the same lender without having to go through the process of switching providers. This is called a product transfer and can be more straightforward than jumping between lenders.
If interest rates have fallen dramatically, it could be worth seeing if you’re able to remortgage with your current lender – even if you are locked into a deal. It could help you to save money, especially if you’re paying the lender’s SVR. Sometimes, your lender may even waiver your early repayment charge.
As your mortgage has already been approved against your home, it shouldn’t need to be valued again if you stay with the same lender. You should also face fewer affordability checks. However, it’s worth considering that you may save more by going to a rival lender. Some providers also offer new customer deals, like cashback.
How long does it take to remortgage with the same lender?
If it’s a simple switch, you may be able to remortgage with the same lender within one week. In comparison, going to a new lender can take between four to eight weeks, as you must account for a formal valuation and credit checks.
Discover more about mortgages and your financial options with Norton Finance Know How articles.
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