In this brief guide, we are going to discuss if you should remortgage before the end of a fixed-term.

Should you remortgage before the end of a fixed-term?

You may want to remortgage at the end of a fixed-term mortgage if the benefits of remortgaging outweigh the benefits of keeping the mortgage.

You can remortgage before the end of a fixed-term but you should take the following factors into consideration:

Early repayment fees

How much equity you have

Alternative mortgage rates

Your mortgage affordability

Mortgage Fees

Early repayment fees

Before considering if to remortgage before the end of a fixed-term mortgage you should check with your current mortgage lender to see what your current early repayment fee on your mortgage is.

You may also be able to find this on the key facts illustration document you submitted.

The early repayment charge on your mortgage will determine if you should remortgage before the end of a fixed-term or not.

If after factoring the cost of the early repayment fee you will still make savings on mortgage interest on your existing mortgage then you may want to remortgage.

How much equity you have

The amount of equity in your home will also determine if you are able to get a remortgage at all. 

If you do not have sufficient equity in your home then you may find very few mortgage lenders who are willing to lend to you except you are looking to downsize and get a smaller home which could mean a smaller mortgage.

Alternative mortgage rates

Before deciding if to remortgage before the end of your fixed term mortgage you should have conducted a search on the mortgage market to see the types of mortgage rates which are currently available and if you will be able to qualify for any of those mortgage rates based on your current circumstances.

It may be worth using a mortgage broker to evaluate this.

Your mortgage affordability

It is very likely that your mortgage affordability may have changed since you took out your existing mortgage and hence you will not be able to get a remortgage on the current mortgage market at a mortgage rate which is cheaper than the one you currently have.

This could be the case if your credit score has worsened due to things such as:

  • A CCJ
  • An IVA
  • A debt management plan
  • A default
  • A bankruptcy
  • A home repossession

Or maybe your income has reduced due to getting a new job

Or it could be that you now have more dependants( children) and hence your expenses are slowly rising.

If this is the case then remortgaging before the end of your fixed-term mortgage may not even be possible.

Mortgage fees

The mortgage fees associated with mortgages could be much higher than you anticipated and hence make a new mortgage not worthwhile. 

You should certainly consider the mortgage fees associated with new mortgages when comparing mortgage products rather than simply focusing on the APRC.

Some of the fees you may incur with a new mortgage include:

  • arrangement fee
  • valuation fee
  • legal fees
  • exit fee

Using a mortgage broker

You may want to consider using an independent mortgage broker to get a remortgage before the end of your fixed-term mortgage.

Mortgage brokers are important as they can access mortgage products from across the whole of the market in some cases.

This could be over 11,000 mortgage products. This may have some advantages rather than going directly to a mortgage lender.

A mortgage broker will look to understand your financial circumstances and then provide recommendations on which remortgage products may be suitable for you based on your mortgage affordability.

After giving you these mortgage recommendations, most mortgage brokers will seek your consent to apply for a mortgage in principle.

Once you are satisfied with the mortgage in principle then the mortgage broker will then look to get you a mortgage offer.

This will come with a key facts illustration document which details out the features of your mortgage including how much you will pay per month.

It will also contain information on if there are any limits such as early repayment fees, or annual overpayment limits.

If you are happy with everything you can then go on to secure your remortgage with the help of a conveyancer.

FAQs: remortgaging before the end of a fixed-term.

What happens at end of fixed term mortgage?

At the end of your fixed term mortgage, the mortgage lender will typically switch you onto its standard variable rate mortgage which usually has a higher mortgage rate than the mortgage lenders fixed-term mortgage.

This means your monthly mortgage repayments will rise if you do not remortgage to a cheaper mortgage.

Can I get out of my fixed rate mortgage early?

Yes, you can get out of your fixed-rate mortgage early but you should be aware that the mortgage Lender may charge you an early repayment fee. This could be the case even if you simply want to change the amount you borrow.

How far in advance can I remortgage?

You can usually start the remortgage process by as much as 6 months in advance.

Getting a mortgage offer a few months early will allow you to switch your mortgage to a cheaper mortgage before incurring any interest charges with your current mortgage lender.

Starting your remortgage in advance and securing a mortgage offer may also be a good idea in case mortgage rates rise within that time.

In this brief guide, we are going to discuss if you should remortgage before the end of a fixed-term.

If you have any questions or comments please let us know.

John Bate

John has 22 years of experience in financial services. This spans across financial research, financial services (As a qualified mortgage broker and underwriter), financial trading and sales at global investment banks. While working as a publishing research analyst, he covered European bank credit and advised institutional clients on investment strategies at both JP Morgan and Societe Generale. John has passed all three levels of the CFA (Chartered Financial Analyst) programme.