Remortgaging Prior to Product Expiry – Frequently Asked Questions
Oliver Whelan talks all about remortgaging prior to product expiry.
Can I remortgage before my deal ends?
Yes, you certainly can. One thing to be aware of is, if you’re on a fixed rate product and decide to end it early, you will probably be hit with an early repayment charge. So the best thing to do is have something set up so that the remortgage can take place seamlessly at your expiry date.
How soon can you remortgage after buying?
Most of the time, people go for a fixed rate period, which are the most common products on the market. They might be a two, three or five year fixed which do tend to come with early repayment charges. But we can arrange for a remortgage up to six months prior to your rate coming to an end.
Let’s say for example, your mortgage is due to end in the next six months. We can start the remortgage mortgage process now – we will see what rates are available out there and then secure a good deal. Mortgage offers tend to last for about six months, so we can get something in place straight away. That term will switch automatically when your rate comes to an end, and no early repayment charges will apply.
Do I have to switch lenders at the end of my rate?
No – you also have the option to stay with your current lender. So let’s say, for example, you’re on a two year fixed rate, which is due to come to an end in a couple of months time. Typically speaking, most lenders will contact you three months or ninety days prior to that rate coming to an end.
They’ll tell you what they can offer and so rather than remortgaging to another lender and getting solicitors involved, you can make a simple switch. It might not be the best offer in the marketplace, as the rate might be higher and the monthly repayments more expensive.
But if the rate is fairly competitive and speed and simplicity are important to the customer, we can arrange this for you. It’s called a product transfer.
Can I change my mortgage product before completion?
Again, you can do that but you will incur an early repayment charge. Most lenders will charge a certain percentage depending on how long is left. These charges will be made clear on your mortgage offer, but typically speaking if you decide to remortgage in the first year of your five-year mortgage deal or you want to clear the whole loan, there will be a repayment charge of about 5%. In the second year it will be 4%, 3% in the third and so on. So yes, you can, but we recommend that you don’t.
What happens if you don’t re-mortgage before product expiry?
If you leave your product to expire, you’ll be put on the lender’s standard variable rate which is often quite a lot higher than the rate that you will have previously been paying. That will mean a significant increase in your monthly payments. Plus, because it’s a variable rate, that rate can change, so your mortgage payments could go up and up month by month.
You could end up paying an extortionate amount for your mortgage, most of which is interest. So I would highly recommend reviewing your options about six months before your product comes to an end.
What costs are involved in remortgaging?
It’s not too expensive. It’s much less than when you purchase a property because there is no stamp duty.
Typically speaking if you’re looking to remortgage with a new lender, conveyancing will typically cost around £500. But some lenders offer cash back on the remortgage to pay for that legal fee. Likewise, most lenders do offer a free legal service as well. So the costs are minimal when remortgaging.
One thing to bear in mind is that a lot of mortgage products come with product fees. These can either be paid upfront or added to the loan. If you add them to the loan, you will be charged interest on that additional cost.
How can The Mortgage Store help?
We’re a very experienced brokerage with an excellent level of staff behind us – we know what we’re doing! We can definitely help if you’ve got a rate coming to an end, and if we’ve arranged a mortgage for you in the past we’ll already have a note in our diary to contact you six months prior, to look at the options for you.
Your property may be repossessed if you do not keep up with your mortgage repayments.