If you are closing towards the end of your fixed term, you are probably thinking about your remortgage. Most homeowners will start their remortgage process three months before their deal is coming to its end, however, what happens if a deal crops up and you want to start the process earlier to capture this deal?
In most cases, you will be able to remortgage early, however, this can sometimes differ between lenders. If you are able to remortgage early, you should carefully think about the implications of doing so before rushing into it!
Typically, when you are taking out a mortgage, you will be presented with three different mortgage options: fixed-rate, tracker and discount rate. You will also find more niche options to choose from such as interest-only deals etc., however, you will most commonly find these three on the market.
Fixed-rate mortgages are exactly what they say on the tin. Your interest rate will remain the same for a fixed period of time, meaning that your monthly mortgage payments will be the same until your fixed mortgage term ends.
When you come to the end of your fixed term, you will automatically switch onto your lender’s standard variable rate of interest (SVR). Their SVR will undoubtedly be higher than your current rate because lenders track the Bank of England’s rate and add their own percentage on top. Your monthly repayments will likely increase if you end up on their SVR. This is why it is a necessity to remortgage in Nottingham before your deal comes to an end.
Tracker mortgages use your interest rate plus the Bank of England’s base rate to determine your monthly mortgage payments. Since the Bank of England’s base rate can go up and down, your payments may change monthly. This could save you money but also cost you more each month.
For example, if your tracker mortgage product has a 1.5% base rate and the Bank of England’s base rate is 0.5%, you will receive 2% overall interest on your mortgage. In six months’ time, if the Bank of England’s base rate has increased, you would expect to pay slightly more on your payments going forward until it goes down (if it does).
Discount rate mortgages track a rate set by your lender, however, this rate can increase or decrease at any time, it’s completely up to your lender. People often compare these mortgages to variable rate mortgages as your rate and payments can change each month.
As a mortgage broker in Nottingham, we see many different reasons why people choose to remortgage. Some reasons are more common than others too; usually, they won’t find a better deal, fund home improvements or consolidate debt.
When we say that you can remortgage early, usually, this is within 6-3 months prior to your current mortgage term ending.
The most common remortgage scenario could be considered a regular remortgage. If you are coming towards the end of your mortgage term, you may want to remortgage to avoid falling onto your lender’s SVR.
If you are looking for a new mortgage product and need remortgage advice in Nottingham, get in touch and we will try and help you find the perfect remortgage product for your personal and financial situation.
You may be searching the market for a better deal and come across one that you like the look of, however, your term hasn’t ended yet! If you are worried about missing out on this product you may want to remortgage early to get a hold of it before it goes. If you remortgage too early, you may face an early repayment charge to do so.
People sometimes remortgage early to fund their home improvements. They may want to get the work on their home started sooner rather than later, wanting to combine the costs of the improvements with their mortgage.
When it comes to remortgaging early, this is one of the most popular reasons for doing so. It can often be the smartest thing to do, despite the fact that you could likely face an early repayment charge.
If you are midway or over halfway through your mortgage term, and you can see that the interest rates are rising dramatically, you may want to remortgage in order to avoid these rates. If you manage to secure a fixed-rate deal prior to the rates rising, you may be able to keep your payments down for a lengthy amount of time.
If you are in debt, you can possibly incorporate some of your debt into your mortgage to make the payments more manageable. If you are unable to do this, you may need to consider a debt management plan.
In turn, just like home improvements, your monthly mortgage payments will rise, however, your debt will be a lot more manageable.
You should think carefully before securing other debts against your home. By adding your unsecured debts to your mortgage, which is secured on your home, you are potentially putting your home at risk if you cannot make the required repayments.
Although the total monthly cost of servicing your debt may have reduced, the total cost of repayment may still have risen as the term of your mortgage is longer than it may have taken to repay the debts originally.
Early repayment charges may put off those looking to remortgage early. ERC costs can rise depending on how early into your term you are. For example, if you are halfway through your term, you can expect to pay a lot more than someone who has less than six months of their term left.
These costs can get very expensive, however, you have to consider that switching mortgage products could also end up saving you hundreds further down the line, particularly if you are remortgaging to avoid interest rate rises etc.
It is always worth speaking to your mortgage lender or mortgage broker in Nottingham prior to this. They will be able to tell you roughly how much the ERC will be and help you decide whether this is the best solution for you.
At the end of the day, it is completely up to you whether you choose to remortgage early or not. If you feel like it will benefit you in the long run, it could be well worth starting your process sooner rather than later, so that you don’t miss out on the rates available.
Before you do, make sure to speak to a remortgage advisor in Nottingham to ensure that you are taking the best option for you.
You can remortgage early by starting your process with a free remortgage review with Nottinghammoneyman. Our mortgage advisors in Nottingham are here to help you find the most appropriate remortgage deal for your personal and financial situation.
Last edited 30/08/2022