As your fixed-rate mortgage ends, you'll move onto the lender's standard variable rate (SVR).
The period before this happens can be the perfect time to see if you could save some money by switching to a new deal. A competitive market means you may be able to find a lender that can offer you a better deal and more flexibility on repayments. But to ensure a smooth transition, you may need to start the process sooner.
Below is a guide to knowing when to remortgage so you can prepare yourself to make the best move you can.
A note about remortgaging
Make sure you can afford the repayments on a new mortgage before moving lenders or switching deals. If you’re happy with the SVR you’ll move to and can’t see a better deal elsewhere, you might want to think about staying put.
When is the right time to remortgage?
The following things will help you decide when it’s time to remortgage:
At the end of your fixed term mortgage
If you have a fixed-term mortgage, you should consider remortgaging when you get to the end of the fixed period. Otherwise, you may have to start paying more when this rate ends, and you’re moved to the SVR. Keep in mind you will usually have to pay early repayment charges if you wish to remortgage before your fixed term ends.
When interest rates are low enough
It is worth shopping around to see if you can find a better deal on your remortgage. You can save a lot of money if you can enter a new fixed-term mortgage on a lower interest rate. If your current mortgage is a special fixed deal, you may be subject to early repayment charges for leaving before the term ends.
You have a good LTV ratio
Loan to value ratio (LTV) is made up of the amount of your home you have paid for (equity) in comparison to your mortgage loan. The more equity you have in your property, or if the value of your house has increased, the better a remortgage deal you could secure.
When is a good time to look for a remortgage deal?
The best time to start looking for a remortgage deal is around three months before your fixed term ends. You want to give yourself plenty of time to shop around to check the other rates on offer. You’ll want to avoid the move to SVR if you can. The SVR will invariably be higher than the fixed rate you were paying - this means more of your money goes on the balance (what you owe) rather than the fees on top.
Three months is about the ideal time to be able to look at what else is on offer from different providers in time for the end of your fixed-term mortgage.
Should I remortgage before my current deal ends?
If you move before the end of your current fixed-term deal, you might end up paying a lot in early repayment charges and exit fees. To avoid this, arrange for your new mortgage to start as your current one ends.
Can I remortgage with the same lender?
Yes, it’s possible to switch mortgages and stay with the same lender. Talking to your current lender before your rate is about to change to their SVR could save you time. They'll want to keep your business and can help you figure out which product you can afford and for how long. By staying with the same lender, you’ll also reduce the amount of admin you’d have to do if going elsewhere, which could save on extra fees.
Why go to a new lender for a mortgage?
While it's possible to remortgage with your current lender, you might find that others offer lower rates. If that’s the case, it won’t hurt to shop around in search of the best deal. If you can save money, then it is worth choosing a new lender.
How often can I remortgage?
You can remortgage every time your fixed term ends. These introductory rates could last anywhere from two to ten years. As above, it’s best to stick with a provider for the fixed terms without moving so you don’t pay all those extra costs.
Can I remortgage with bad credit?
Yes, it’s completely possible to find a new mortgage even if you have a poor credit score. Lenders will look at your credit history when deciding what rate to offer you. The one you get is likely to be more expensive than the one you are currently on if your credit score has decreased in the meantime.
There are many reasons why it could make sense to remortgage. You can save thousands on repayments at a lower rate. Plus, you might want to add some flexibility into your mortgage, such as the ability to overpay or borrow more.
Remember, you need to make sure you take plenty of time – three months or so – to secure a better deal before you move to the SVR. This will also save you money in the long run. Be aware that when borrowing more on your mortgage, you can put your home at risk. Additionally, the more applications to remortgage you make will lower your credit score.
More on remortgaging
You can find more information about remortgaging on our Know How blog.