Can I remortgage If I am on a fixed-rate mortgage?

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Yes, you can remortgage your home, even if you are currently on a fixed-rate mortgage for the next 5 or 10 years. 

However, you will need to consider whether this makes sense financially, since you may incur early repayment charges (ERCs) for leaving your existing mortgage early - and therefore you might need to weigh up the potential savings if you were to change or switch to a lower rate mortgage over the fees for ending early. 

We discuss some of the key points if you are looking to remortgage whilst on a fixed-rate mortgage.

Why might I want to remortgage?

To remortgage essentially means to change your existing mortgage to one with more favourable rates, or switch to a new lender altogether.

At the beginning of your mortgage, you may have agreed to a fixed-rate because it offers a low, affordable rate and being fixed means that you are not affected by changes in the economy or external factors, so it is often very appealing.

But a lot can change within the 2,3 or 5 years of your fixed mortgage, whether it is new rates offered by lenders or changes in the economy (think about covid for example) - and this might make you want to remortgage.

“A remortgage can be an effective way to save money on your mortgage,” explains David Beard, founder and CEO of credit price comparison, Lending Expert.

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“Simply moving from a rate of 5% to 3% per month can result in saving hundreds or thousands of pounds per year.”

“In addition, a remortgage can often be used to raise money against your home. You can arrange to draw down a large sum and then include the repayments in your monthly mortgage repayment plan. This process is very common to pay off debts, make home improvements, pay for weddings or school fees.”

What other fees might I incur?

“To make it worthwhile, you will need to run the numbers carefully,” explains Beard.

“Ending your existing mortgage early could incur a early repayment penalty and you will need to check your original mortgage agreement to confirm this, but they are usually around 1% to 5% of the outstanding mortgage balance.” 

“Plus, you may have to pay for valuation fees (up to £1,000) and legal fees to change and get a new mortgage deal.”

“But if you can access very low rates and raise capital effectively, getting a remortgage can be a very worthwhile and life-changing decision.”

Think carefully before securing other debts against your home.

Your home may be repossessed if you do not keep up repayments on a loan or any other debt secured on it. 

If you are thinking of consolidating existing borrowing you should be aware that you may be extending the terms of the debt and increasing the total amount you repay.

To discuss your remortgage today, you can enquire with Lending Expert in less than 5 minutes and get a free quote.