Can You Remortgage Early on a Fixed-Rate Mortgage?
Yes, but it depends on the lender’s exit terms and how much time is left on the deal. Fixed-rate mortgages usually have stricter penalties for early exit, making it important to weigh the costs against potential savings.
Some lenders offer flexibility, allowing borrowers to remortgage within a set window before the fixed term ends without incurring ERCs. Checking the mortgage agreement or speaking with a solicitor can clarify the options available.
When Should You Avoid Remortgaging Early?
Early remortgaging may not be the right choice if:
- The savings do not outweigh the exit costs – If ERCs and fees cancel out potential benefits, it is often better to wait until the deal ends.
- Your financial situation has changed – A lower credit score or reduced income may mean less favourable mortgage terms.
- Your property value has fallen – If house prices have dropped, you may have a higher loan-to-value (LTV) ratio, making it harder to secure a competitive deal.
Is Early Remortgaging Right for You?
Every homeowner’s situation is different, and deciding whether to remortgage early requires careful financial and legal consideration. Consulting one our our personal solicitor’s can help assess whether early remortgaging is a sensible financial move, ensuring you understand the costs, risks, and potential savings before making a decision.
How to Prepare for a Remortgage: Step-by-Step Guide
Remortgaging requires careful preparation to ensure a smooth process and the best possible deal. Taking the right steps early can help you avoid delays, secure better rates, and meet lender requirements without unnecessary stress.
Check Your Credit Report Before Lenders Do
Before applying for a remortgage, it is important to review your credit report. Lenders assess your credit history to determine your reliability as a borrower. Checking your report early allows you to identify and correct any errors before lenders conduct their checks.
Your credit report includes details about past borrowing, repayment history, and outstanding debts. Factors such as missed payments, defaults, or high levels of debt could affect your ability to secure a competitive mortgage rate. If there are any inaccuracies, you can dispute them with the credit reference agency to ensure your report reflects your true financial position.
A strong credit score improves your chances of being approved for a remortgage at a lower interest rate, potentially saving you money over the long term.
What’s Recorded and What’s Not Recorded on Your Credit Report?
Your credit report includes:
- Your existing mortgage and repayment history.
- Credit cards, loans, and overdrafts.
- Utility bills, mobile phone contracts, and some subscription services.
- Any missed or late payments.
- County Court Judgements (CCJs), bankruptcies, and insolvencies.
However, certain factors are not recorded on your credit report, such as:
- Your savings or income level.
- Your current employment status.
- Whether you have been rejected for credit.
Even if lenders cannot see your salary directly, they will consider your income and affordability assessment as part of the remortgage application. This is why preparing supporting documents is essential.
Know Your Exact Mortgage Balance – Get the Correct Redemption Figure
Before remortgaging, you need to find out how much you still owe on your current mortgage. This is known as the redemption figure. It includes:
- Your outstanding loan balance.
- Any early repayment charges (ERCs).
- Any interest owed up to the redemption date.
You can request this figure from your current lender. Having an accurate redemption figure helps you calculate how much you need to borrow on your new mortgage, ensuring you do not end up under- or over-borrowing.
Estimate Your Property’s Value – How This Affects Your Loan-to-Value (LTV)
The value of your property plays a crucial role in determining the mortgage rates available to you. Lenders use your loan-to-value (LTV) ratio to assess the risk of lending. The lower your LTV, the better the mortgage deals you may be eligible for.
For example:
- If your property is worth £300,000 and you have £150,000 left on your mortgage, your LTV is 50%.
- If your property has increased in value to £350,000, your LTV would drop further, potentially giving you access to lower interest rates.
Many lenders will conduct their own valuation before approving a remortgage, but it is helpful to get an estimate yourself. Online valuation tools or local estate agents can provide a general idea of your home’s current market value.
Sort Out Your Paperwork Early to Avoid Delays
Applying for a remortgage involves providing financial documents to prove affordability. Gathering these in advance can speed up the process and prevent delays. Lenders typically request:
- Payslips – Usually covering the last three months for employed applicants.
- Bank statements – Showing your income and outgoings, usually for the last three to six months.
- Proof of identity – Passport or driving licence.
- Proof of address – Utility bills, council tax statement, or bank statements.
- Mortgage details – Your current mortgage offer and redemption statement.
If you are self-employed, lenders may require two to three years of tax returns or accounts, along with SA302 forms from HMRC. Preparing these documents in advance ensures your remortgage application progresses without unnecessary setbacks.