Can you remortgage during a fixed-rate term?

If the cost of leaving your current mortgage is more than covered by the savings you’d make by switching to another deal, then it may well be worth doing so. If it’s very costly to leave, you may be better off waiting. 

Either way, our expert mortgage advisor team, here at Mojo, can help you make the best decision for your circumstances.

What is a ‘fixed rate’ mortgage deal?

A fixed-rate deal is exactly as it sounds, it has an interest-rate that is fixed for a set length of time - so it can’t go up or down. You can find more about them on our dedicated fixed-rate mortgages page. 

Although many fixed-rate deals are fairly short, ranging between 2 and 5 years, there are plenty of circumstances that may lead to you wanting to leave before the deal ends. 

So, can you remortgage during a fixed-rate mortgage deal?

The good news is, yes, you can. There’s no legal obligation to stay in a fixed term mortgage deal. However, you’ll likely have to pay Early Repayment Charges (ERCs) and exit fees.

Most people, therefore, choose not to remortgage during a deal term, to avoid paying any applicable fees. This is especially true if their sole purpose for the remortgage is to save money - as the fees can cancel out the financial benefits. 

The trick is to work out if the savings you’ll make by remortgaging are greater than the fees you’ll have to pay to leave your existing mortgage deal.

Can I save money by remortgaging early at the moment? 

Although they are now falling slightly, as mortgage rates have risen dramatically over the past couple of years, it’s unlikely that those coming out of 2, 3 or 5 year fixes will benefit from remortgaging early.

This is because mortgage interest rates across the board are much higher than they would have been when you took out your mortgage. This means that when you remortgage, you’ll likely be paying more not less than before.

That said, while it’s best not to pay fees to remortgage early now, you can arrange a remortgage up to 6 months in advance with most lenders without paying any fees. This enables you to fix a rate that’s available now, which you transfer onto when your existing deal comes to an end.

While the rate you’ll get is likely higher than what you were paying when you first took out your mortgage, it will still be lower than the SVR (standard variable rate) - which is what you’d fall onto at the end of your current deal anyway.

You're also not bound by a rate that you tie in ahead of time until you transfer to that deal, so it’s possible to switch again if you find a better deal in the meantime. 

Other fees you’ll need to consider when remortgaging

ERCs and exit fees are just part of the story. You’ll also need to think about valuation fees, arrangement fees and legal fees when you remortgage, as they will also apply.

Essentially remortgaging is taking out a new mortgage with a different lender, so they will need to carry out all the same checks and functions as when you took out the original loan. A product transfer (remortgage with the same lender) can be slightly easier, but won’t always save you as much money. 

If you’re thinking about a remortgage, at Mojo Mortgages we compare thousands of mortgage deals in an instant and recommend the best one to suit you - taking all the fees into account. And the best part, our free mortgage broker service means we do it without charging you a penny.