It’s possible to refinance with your existing mortgage lender or switch to an entirely new one – but there are implications to remortgaging during a fixed-rate term to be aware of before jumping full steam ahead. The early repayment charge (ERC) for leaving a fixed rate early can be significant so it’s worth comparing the savings you’re set to make by remortgaging vs the fees you’ll be hit with for leaving early. A Slater Hogg Services Consultant can help advise on the best option for you.
What is the downside of remortgaging before a fixed rate ends?
As you probably know, one of the main consequences is having to pay fees for leaving your existing deal early. There are several charges that you might be liable for and you need to factor these into your decision:
- Early exit fees: By remortgaging you’d be ending your mortgage contract early, which often means there are fees equal to a percentage of the loan amount to pay. The longer you have left to go in your fixed rate period, the higher the fee is likely to be.
- Legal fees: There are circumstances where you might need to find a solicitor to oversee the remortgaging process, such as moving to a new lender, for example. It’s worth remembering that many mortgage lenders do offer free legals and/or cashback deals to cover these costs.
- Valuation fees: If you’re moving to a new lender, the new mortgage provider will want to see evidence of the value of the house, so you might need to pay for a valuation survey. Many mortgage lenders offer free valuations on remortgages as an incentive.
Slater Hogg Services Consultant based in our branches can make sure you’re aware of every potential cost involved and help you keep these charges to a minimum by matching you with a mortgage lender who waives certain fees as an incentive. They have access to thousands of mortgage products to compare – so it’s worth having a chat to see how they can help.
How do I get the best remortgage deal?
When you remortgage, there are some things you can do to scope out the best deal. It’s always worth working with a mortgage professional who has access to a wide range of products rather than a limited selection through your existing lender. You can start by checking and improving your credit rating. Early exit fees, as well as legal and valuation fees on a remortgage can sometimes offset what looks like a great low interest rate – so to find the best remortgage deal, you have to factor these in. And if you’re borrowing a lower percentage of the property’s value then you can access some cheaper deals.
When should I start looking to remortgage?
There’s no simple answer to this question. You can theoretically remortgage anytime but, to avoid being hit with early repayment charges, people tend to look at remortgaging towards the end of their existing mortgage rate. Many lenders’ mortgage offers last between 3 and 6 months from the date they’re issued, which means you can start shopping and get your application in on a deal you like. This would then secure the rate and result in a formal offer that would be valid when the existing rate comes to an end. Offers vary from lender to lender so it is worth speaking to a Mortgage Consultant to provide a personalised illustration.
Can I remortgage with bad credit?
You might still be able to remortgage with a poor credit rating, but you probably won’t have access to the very best deals. A starting point would be to improve your credit rating and have a conversation with a Slater Hogg Services Consultant who will be able to lay out your next steps…
Do you need to book a remortgage appointment?
How do I remortgage during a fixed-rate term?
Here are the steps to take if you want to remortgage during a fixed-rate term…
1. Find out whether any exit fees apply: Speak to your mortgage lender or check your paperwork to find out whether your current deal has exit fees. Most do, but you should find out exactly how much you’ll need to pay so it can be factored into the overall cost.
2. Get a qualified Consultant involved: Our associated company Slater Hogg Services will offer you advice throughout the remortgage process and will start by making sure you’re aware of the implications of refinancing early. They will also search through a panel of high-street lenders to track down the best deal that you qualify for, one that will leave you better off financially with any exit fees and other charges factored in. Remember, the best mortgage you qualify for might only be available through a lender you’ve never heard of, or a mortgage provider who is only approachable through us!
3. Answer some quick questions: This will help our mortgage professionals find the most relevant deals for you, to suit your particular situation. At times, Slater Hogg Services may even have access to exclusive products which you can’t get anywhere else, including going direct to the lender.
How can investors remortgage a buy-to-let property?
Refinancing a rental property can make your mortgage more manageable or give you the cash you need to improve your tenant’s space. It can even help you to put down a deposit on a new property. In essence, you’re cashing in on the increase in your property’s value. Investors will buy a property – often below market value, then they’ll add value and refinance and hopefully recycle their money back out. If you’re an investor and considering this strategy, it’s worth speaking to a property professional who can discuss your next steps…