You might assume that you can’t remortgage until your current mortgage term is complete, but that isn’t actually true. It is possible to remortgage early, but it’s important to decide whether this is the right move for you financially.
In the same way as you’d compare your options for a car insurance deal yearly before renewing, it’s important to make sure that you have the best mortgage product available to you. Remortgaging allows you to do this by changing the mortgage you currently have to either a different deal with the same lender, or a new deal with a new lender (which is referred to as a product transfer).
When should I remortgage?
You can remortgage up to six months before your fixed term ends. If you want to remortgage before the fixed term ends, you’ll likely be subject to early repayment fees. With this in mind, it’s not worth remortgaging if you’d spend more on fees than you’d save. Speaking to a mortgage adviser can help when figuring out whether this is right for you.
You might want to remortgage early because:
- You’ve got a bit more cash in your pocket now and would like to overpay on your mortgage but your current provider doesn’t allow it
- You’d like to shorten the length of your mortgage and pay off more each month than is currently agreed – or similarly, lengthen it and pay less
- You’ve paid off a healthy chunk of your mortgage over time, or your house has increased a lot in value, and you want to reduce your interest rate
- Your current mortgage term is ending and you’re about to move onto the lender’s standard variable rate
- You’re currently on a variable rate mortgage, and you’re worried about rates increasing
You can also remortgage to raise money against your home. This could be for:
- Paying off debts
- Paying off loans (including tuition fees or a Help to Buy loan)
- Home improvements or extensions
- A deposit on another property
- Buying a car
- Staircasing out of a Shared Ownership
How does remortgaging work?
The remortgaging process usually takes between 4 and 6 weeks, and it can be very simple if you work with an experienced advisor or broker.
Here’s how it works…
Speak to your advisor to complete a fact find, or you can download and complete a fact find online here. This is the process of getting an idea of where you stand financially by assessing factors such as your incomings and outgoings.
Then, you’ll need to supply relevant documentation to support the information gathered in your fact find. This includes:
- Passport (or another accepted form of ID)
- Proof of address
- Current mortgage details
- Payslips from the last three months, or accounts and tax returns if you’re self-employed
- Proof of any commission of bonuses
- Bank statements
The mortgage advisor will recommend your options, and you’ll discuss what your preference would be.
The mortgage advisor will complete a decision in principle with the recommended lender and then submit a full application. A lender will do a valuation (often remotely, without needing to go the property), and assess the documents needed for the application. If all is accepted, an offer will be issued.
Any legal paperwork is completed if it’s required and a date is set for the new mortgage product to be activated. If you’re remortgaging to pay off a Help to Buy loan or staircasing out of a shared ownership, there is an extra stage and the remortgage process will be longer due to the third party involvement.
If you are paying back a loan, you need to contact Help to Buy or the Housing Association to let them know that you want to repay the loan, so they can complete the paperwork in-house. You need to obtain a RICS valuation report to supply to them so that you both know the amount that is to be raised to repay them.
Going through an experienced broker and advisor will be a huge help when remortgaging early, as they can show you all the mortgage deals on offer to you and help you take the necessary steps. If you want to talk to an advisor about whether remortgaging early is right for you, get in touch with us here at Mortgage Light today. We’ll help review your mortgage product and decide whether it is best to move it or not.