Tim Leonard
Generally, you can remortgage at any time. However, it’s crucial to wait until the time is right, which makes understanding when you should remortgage important, too. Read on to learn more about when you can remortgage, when may be the best time to remortgage, and if you can remortgage early.
Think carefully before securing other debts against your home. Your home may be repossessed if you do not keep up repayments on a loan or any other debt secured on it
Can you remortgage at any time?
Technically you can remortgage whenever you want, even if you’re currently locked into a fixed-rate mortgage or any other type of introductory rate deal. However, there is usually an early repayment charge if you remortgage before an existing deal ends.
That said, it’s a good idea to start looking for a new remortgage deal around six months before the initial period on your current mortgage expires. You’ll then have time to assess the options available and get a new mortgage in place if you want to avoid moving onto your current lender’s standard variable rate (SVR) at the end of your existing deal.
» MORE: See current mortgage rates
Can you remortgage early?
You can remortgage if you’re still within the initial rate period of your existing deal, but you’ll usually need to pay an early repayment charge to your current lender if you do. These charges typically amount to between 1% and 5% of your outstanding mortgage balance, and can easily add up to several thousands of pounds. If you’re thinking of remortgaging before an introductory rate period ends, you should take these fees into account when working out if remortgaging early is worthwhile.
Is it worth remortgaging early?
It may be worth remortgaging early if the savings you can make by moving to a lower mortgage rate outweigh the early repayment charges you have to pay. Compare your monthly repayments now with the repayments you’d pay on the new rate and see how much you’d save over the duration of your mortgage. But remember to factor in any other fees associated with taking out a new mortgage, too.
An argument also can be made for remortgaging early to lock in a mortgage rate now if you think rates will rise sharply before your existing deal expires. However, no one knows for sure what will happen to rates going forward, and they may go down – you’ll be taking a risk that could backfire. Always talk to your lender and consider seeking mortgage advice if you want to remortgage early.
» MORE: Mortgage repayment calculator
Should I remortgage now?
The best time to remortgage will depend on your circumstances, wants and needs. Most people remortgage to save money, but you may also want a different type of mortgage that is more suited to your circumstances. This might be anything from borrowing more by remortgaging for home improvements to getting a more flexible mortgage.
You may feel the time is right to remortgage when:
- Your current mortgage deal is coming to an end and you want to switch before you are transferred to your lender’s SVR – these tend to be higher than rates on other types of mortgages. This is the most common reason for switching.
- Mortgage rates are lower than you’re paying on your current deal, which means you could make savings on your monthly payments.
- You want to protect yourself from potential rate rises by opting for a fixed-rate mortgage, where the interest rate stays the same for the period you fix.
- You think rates may fall, so would prefer a tracker mortgage to try and take advantage.
- You want a more flexible mortgage, such as one that allows overpayments or underpayments with no penalty, or an offset mortgage where your savings can help reduce the interest you have to pay.
- Your house has increased in value or you have paid off a good amount of your mortgage over the past few years. Remortgaging at a lower loan-to-value band may offer the chance to access lower mortgage rates.
- You want to raise money by remortgaging to release equity from your home, perhaps to help cover a large expense, such as home renovations, or maybe to supplement your income. It’s also possible to remortgage to consolidate debt.
» MORE: How remortgaging works
When might you not want to remortgage?
There are some situations when remortgaging may not necessarily be easy, worthwhile or even possible. These can include when:
- There are high early repayment charges to pay for leaving your existing mortgage before it ends. These fees could cancel out the potential savings of remortgaging to a cheaper deal.
- You have a small mortgage, and the fees involved with securing a remortgage deal negate any financial benefit you would get from a lower rate. Some lenders won’t accept remortgage applications under a certain minimum amount either.
- The value of your property has dropped, which may put you in a higher loan-to-value (LTV) bracket, and potentially facing higher mortgage rates. Even worse is falling into negative equity, where the value of your home is lower than your mortgage, a situation from which it’s difficult to remortgage.
- Your employment status has just changed, which may make it difficult to meet the eligibility requirements of a new lender, which must assess your financial situation and be confident you can afford the mortgage. This includes if you’ve just started a new job or haven’t long been self-employed – some lenders want to see three years of accounts if you work for yourself.
- Your credit score or finances have changed for the worse, which could also make it harder to pass affordability and eligibility checks.
- It’s been less than six months since you bought the property, as there’s likely to be fewer lenders who are willing to offer you a remortgage deal.
If it’s looking unlikely you’ll be able to switch to a new provider you may want to consider remortgaging with the same lender you’re currently with. If you’ve kept up with your mortgage repayments, and won’t be borrowing extra or changing the terms of your mortgage, your current lender may decide there’s no need for another affordability check or credit check if you remortgage with them – this is often called a product transfer.
Generally, however, it’s best to consider as many remortgage options as possible from various lenders to make sure you’re getting the best deal. Approaching a mortgage broker, such as our partner London and Country Mortgages (L&C), to get mortgage advice can be worthwhile if you’re struggling to find a remortgage deal or need help. Brokers may have access to deals you can’t apply for directly yourself and will often know which lenders are most likely to offer you a mortgage if your circumstances aren’t straightforward.
» MORE: Best mortgage lenders
When should you remortgage?
Ideally, you should start the remortgage process around six months before you plan to make the switch. This should allow enough time to do your research and get the application in progress.
Usually mortgage offers are valid for between three and six months, meaning you can be ready to move over to your new mortgage precisely when your current deal ends.
» MORE: How long does it take to remortgage?
How often can you remortgage?
You are allowed to remortgage as often as you like, as long as you have a new deal to move onto. Remember, however, that there will be fees to pay for each remortgage, and probably early repayment charges if you’re switching before your current deal ends. That’s why most people wait until the initial rate period on their existing deal expires before remortgaging.
» MORE: Remortgage costs & fees explained
How soon can you remortgage after buying a property?
It should be possible to remortgage at any time, but be aware that some lenders won’t accept remortgage applications if you bought the property less than six months ago. It isn’t a rule bound in law, and some lenders that will let you remortgage any time after buying. However, a wider range of remortgage options is likely to be available if you wait until at least six months after you’ve been registered as the property owner on the title deeds at the Land Registry.
Do you have to remortgage?
No, you don’t have to remortgage, and it isn’t right for everyone. But if your initial deal has ended you should check how that change affects you.
More generally, if you want to save money over the lifetime of your mortgage, it’s sensible to review the deal you are on from time to time and see what other lenders are offering. This will help make sure you aren’t missing out on significant savings.
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