Stay with the same mortgage lender. This is the most common way of not paying the early repayment charge when remortgaging or buying another property. It does however limit you to the mortgage product options the mortgage lender offers which may not be as preferential as you can get on the open market.
It is possible to remortgage with your current lender, although this is usually referred to as a 'product transfer'. A product transfer is not normally considered to be new lending (unless you take the opportunity to borrow an additional amount), whereas remortgaging with a different lender would be.
You can't avoid paying the ERC unless you wait until your mortgage deal ends and no fee applies. However, if you're switching mortgage to get a much better deal, you may find that over time the lower interest rate outweighs the cost of the ERC.
The best way to avoid an early repayment charge is to be clear on the terms of your agreement and to work within them. Here are some possible workarounds: Know how much you can overpay each year without a penalty, and don't go over this limit. It's usually no more than 10% of your mortgage balance each year.
Remortgage costs are the extra fees and charges you'll usually have to pay when you remortgage. This covers a range of different costs – from the fees you might have to pay to leave your current mortgage provider to the costs of legal and administration work when setting up your new home loan deal.
So, can you remortgage during a fixed term? Yes, you can. You might have to pay Early Repayment Charges (ERCs) and exit fees to do it, but there's little stopping you from leaving a fixed-rate mortgage deal before the end of the agreed term. There's nothing legally stopping you leaving a fixed term before it ends.
What is a remortgage? A remortgage is when you move your mortgage to a new deal with another lender, or move to a different deal with your current lender. Switching to a new interest rate with your current lender is known as a product transfer, and not much will change other than the amount you repay each month.
If you want to remortgage before your fixed rate comes to an end, you'll probably have to pay early repayment charges. Usually this isn't worth paying but you should consider it if interest rates have dropped since you took out your fixed rate mortgage.
When should I remortgage? In general, you should start looking for a new mortgage around three months before the end of your current mortgage's promotional deal.
Consider starting the remortgage process early – most deals can be agreed in advance of an application. Many lenders will let you do this up to three months before you start paying them, so you could secure that rate now to protect against the threat of more hikes amid the cost-of-living crisis.
How long does it take to remortgage with the same lender? From start to finish, it normally takes around six weeks to switch to a new mortgage deal with the same lender. Your actual “transfer” from one deal to another should happen within a matter of days.
Remortgaging with the same lender is known as a product transfer. If the remortgage is a simple one you may not need a solicitor's services. However, if you're making changes (such as removing or adding someone to the mortgage) you're more likely to need a solicitor or conveyancer.
Do I need a deposit? You don't need a deposit for a remortgage as you can use the equity you have in your home. If you wanted to get a cheaper mortgage, using a deposit to add to the equity you already own is an option and this will lead to you needing a smaller mortgage.
There's no limit on the number of times you can remortgage your home, but most people do it when their fixed-rate period ends. Whether you decide to remortgage early or at the end of the fixed-rate, it's vital that you have all the details so you can make an informed decision about remortgaging.
Generally, it takes around four to eight weeks to remortgage. This is the typical time it takes after the date you apply but it isn't always guaranteed. If you have delays along the way, this can change the time frame and make it take longer.
Remortgaging while interest rates are low
The base rate is still low - but it is expected to rise significantly in 2022 as a result of rising inflation. It may be beneficial to lock into a competitive fixed rate now to avoid higher costs later.
Pros: Lower interest rates: these deals typically have lower interest rates than longer fixed term deals. Having said that, recently the gap between interest rates for 2 and 5 year fixed mortgages has really narrowed, making 5 year deals look more attractive.
If you want to remortgage to release equity you will need to contact your current mortgage lender or remortgage with a new lender to release the cash. With mortgage rates relatively low, remortgaging may seem like the cheapest way to borrow large sums of money.
One of the ways you can do this is by remortgaging, where you take out a new deal to borrow more money than your current mortgage amount. This allows you access to a cash lump sum.
A remortgage (known as refinancing in the United States) is the process of paying off one mortgage with the proceeds from a new mortgage using the same property as security.
Yes, it's very likely mortgage rates will increase in 2022. High inflation, a strong housing market, and policy changes by the Federal Reserve should all push rates higher in 2022.
The main advantage to remortgaging is being able to save money by switching to a cheaper deal. When your fixed, tracker or discounted mortgage deal ends you no longer benefit from a preferential rate.
You can pay off a mortgage while locked into a fixed rate to own your property outright, but you'll probably find that your lender will request an early repayment charge and potentially an extra fee to close your account and remove their charge from the property.
PAPERWORK REQUIRED FOR A REMORTGAGE APPLICATION
When you apply for a mortgage any lender will typically require, proof of identity and address, proof income, evidence of affordability, and proof of mortgage payments.