Can I remortgage before my fixed rate ends?

If your fixed rate is coming to an end, or you’ve seen better deals advertised, you might be wondering whether you can switch now. The short answer is yes, you can remortgage before your fixed rate ends. Whether you should depends mostly on one thing: early repayment charges.

This guide explains your options, the costs to check, and how to time it so you don’t pay more than you need to.

What happens when your fixed rate ends?

When a fixed or tracker deal finishes, most mortgages move onto the lender’s standard variable rate (SVR). The SVR is usually much higher than the deals available to new and existing customers, so your monthly payment can jump noticeably. Many people stay on it simply because they didn’t realise their deal had ended.

The good news is that you don’t have to wait until the last minute to sort out your next deal.

You can usually secure a new deal months in advance

Many lenders let you secure a new mortgage deal around four to six months before your current one ends. The new deal then starts when the old one finishes, so you move straight across without paying early repayment charges or spending time on the SVR.

If rates fall after you’ve secured a deal, it’s often possible to look again before it completes. That’s one reason it pays to start early: you can lock something in and still keep an eye on the market.

Early repayment charges: the big thing to check

If you leave a fixed rate before it ends, your lender will usually charge an early repayment charge (ERC). This is normally a percentage of the amount you owe, and it often reduces each year of the deal. On a larger mortgage it can run into thousands of pounds.

You’ll find the ERC details in your mortgage offer, and often on your annual statement. Your lender can also tell you the exact figure if you ask for a redemption statement.

Leaving early can still make sense in some situations, for example if:

• your ERC is small or about to end, and a new deal would save more than it costs
• you need to borrow more and your current lender won’t lend it
• you’re moving home and can’t take your mortgage with you
• your circumstances have changed and you need a different type of mortgage

The way to decide is to compare the total cost of switching now, including the ERC and any fees, against what you’d pay by staying put until your deal ends.

Product transfer or full remortgage?

When your deal is ending you’ve two main routes:

• A product transfer means moving to a new deal with your current lender. It’s usually quicker, often needs no valuation or legal work, and can suit people whose circumstances have changed.
• A remortgage means moving to a different lender. It can open up a wider choice of deals, or let you borrow more, but it involves an application, a valuation and legal work.

Neither is automatically better. A broker can compare your current lender’s offer against the wider market and tell you which works out best overall.

What costs are involved?

Depending on the deal, remortgaging can involve an arrangement fee, a valuation fee, legal fees and a fee from your current lender for closing the account. Some deals include free valuations or free legal work, and some have no arrangement fee but a slightly higher rate. It’s the total cost over the deal that matters, not just the headline rate.

Borrowing more when you remortgage

Remortgaging can be a chance to raise money for home improvements or other plans. If you’re thinking of using it to pay off other debts, think carefully: spreading short-term debts over a long mortgage term can mean paying more in total, and those debts become secured on your home. Find out more on our raising money against your home page.

A quick checklist before you start

• When does your current deal end?
• Is there an early repayment charge, and how much is it today?
• Roughly how much do you owe, and what’s your home worth?
• Has anything changed with your income, job or credit history?
• Do you want to borrow more, or change your mortgage term?

How McDowell can help

We’re a Northern Ireland based mortgage broker with over 30 years’ experience. We’ll check your ERC and end date, compare your lender’s own offer with the wider market, and tell you plainly whether switching now or waiting is better for you. Find out more on our remortgage advice page, or book a free call below.

Think carefully before securing other debts against your home.

This article is general information only and isn't personal advice. Mortgage and protection products depend on your circumstances, so please speak to one of our advisers before making a decision.