When Can You Remortgage?

The quick answer is that you can remortgage whenever you want. However, just because you can remortgage when you want doesn’t mean you should jump into the decision.

For example, if you choose to remortgage before the end of your fixed-rate mortgage, you may have to pay an early repayment charge (ERC) which can cost a lot.

In this article, we’ll look at when you can remortgage, consider the best time to remortgage and run through some different scenarios to give you a better idea of whether remortgaging right now is best for you.

When can you remortgage?

You can remortgage whenever you want, as long as you meet your new lender’s criteria or your current lender if you’re staying with them. Although you don’t have to wait until you can remortgage, there are things to consider.

One is that if you remortgage during your fixed term, you will often have to pay an ERC. It’s a fee attached to most fixed-rate mortgages and charges you 1% to 5% of your mortgage balance if you overpay or leave your mortgage before the end of your term.

Before you make any decision on remortgaging, especially in the middle of your fixed term, it’s best to check the small print on your mortgage deal. This way you can see if there are any fees you might pay for leaving early and whether you have to pay any setup fees for your new mortgage.

If you’re considering remortgaging for home improvements, it’s important to remember that you’re borrowing more money. This could increase your monthly repayments and result in you paying more interest over the course of your term.

Other options are available such as a bridging loan, secured loan or personal loan that may be more suitable in this circumstance. The repayments may be higher in the short term, but you could pay less over the long term.

When should you remortgage?

This is a tricky question to answer as this will depend on your circumstances and mortgage type. But as a general rule, you should consider remortgaging six months before the end of your current deal.

This is important to remember because if you don’t do anything at the end of your current term, you will be switched to your lender’s Standard Variable Rate (SVR). This is the lender’s default rate and is almost always higher than their other offers.

Whether the interest rates are higher or lower will usually depend on the Bank of England base rate when you come to remortgage. This is another good reason to wait if you have time left on your mortgage term and interest rates are high, as they may have fallen when you remortgage.

It’s worth remembering you typically have between three to six months to accept an offer from a lender. So waiting until at least six months before your current term ends is a good rule of thumb to follow if you want to get the best remortgage deal. As a general rule, expect the average remortgaging process to take between 4 to 8 weeks.

Use our remortgaging calculator below to get an idea of what your repayments will be after you’ve remortgaged whether you’re releasing equity from your property or not.

When shouldn’t you remortgage?

As well as the early repayment charges mentioned above, there are other scenarios in which remortgaging might not be the best idea. Here are a few of them:

Poor Credit Score

While you can remortgage with bad credit, it can be a difficult process and there’s no guarantee you’ll get a better deal than the one you currently have.

If your credit score has deteriorated since you took out your original mortgage, remortgaging might result in less favourable terms or higher interest rates. In such cases, it might be better to stick with your current mortgage until you can improve your credit score.

Most credit reports will show the last six years of financial activity, so waiting before you remortgage could be to your advantage.

Recent Job Change or Unstable Employment

A recent change in jobs can make it more difficult to get a remortgage, even if your new one pays more than your old one. This is because lenders like stability and see a change in employment as a potential risk.

Lenders typically require evidence of stable income when approving a new mortgage. If you’ve recently changed jobs, are still within a probationary period, or if your income has become less stable (e.g., switching to a commission-based role), it might be challenging to get approved for a remortgage.

This is even truer if you become self-employed, with most lenders requiring at least two to three years of accounts to prove your income. If you’re in this situation, it may be worth delaying your remortgage so you’re less of a risk to lenders when you do look for a new deal.

Interest Rate Disadvantages

If you secured a mortgage with a low interest rate during favourable market conditions, remortgaging might not be beneficial if current rates have risen.

Higher interest rates will increase your monthly repayments and the total cost of the loan over its lifetime. This can negate any benefits from a new mortgage deal.

In such cases, the financial drawbacks of higher interest rates outweigh the advantages of remortgaging, making it better to stick with your existing mortgage.

Changes in Financial Regulations or Uncertain Economic Climate

During times of economic uncertainty or shifting financial regulations, it may be better to keep your current mortgage rather than risk getting a new one under less favourable conditions.

Economic downturns can lead to higher interest rates or more stringent lending criteria, making finding a good remortgage deal more challenging.

In such situations, maintaining your current mortgage arrangement could be the safer and more prudent choice, especially if the future of market conditions seems unpredictable.

Should I remortgage early?

If you’re considering remortgaging early, it’s a good idea to speak with a mortgage broker who specialises in remortgages. They can walk you through the implications of remortgaging early, whether it’s a good idea depending on your circumstances and potentially help you get a good deal.

Just call us on 0808 189 2301 or make an enquiry and we’ll do the rest. We’ll simply ask for a few details and from there can find the broker to suit – it’s completely free and there’s no obligation, just the chance to find the right lender with expert support at your side.