Remortgaging early has previously been a popular choice amongst homeowners in the UK, as many looked to take advantage of low-interest rates or to access their home equity. However, in 2022, increasing interest rates and rising inflation meant many people were wondering if remortgaging early is still a good option.
The bank of England has raised interest rates eight times since December 2021. The base interest rate is now sitting at 3% and is set to rise further, possibly as high as 5%, by as early as next year. For this reason, homeowners are still looking to remortgage early to lock in lower rates before they rise further in these unpredictable times.
Typically, you can only remortgage once your current mortgage term has ended or you have completed the required number of monthly payments. However, there are some cases where you may be able to remortgage early. This article will look at all the things you need to know, including how far in advance you could potentially remortgage and whether you can remortgage early to release equity. So if you are curious about remortgaging early, read on.
Why remortgage early?
There are several reasons why homeowners choose to remortgage, either early or otherwise. Many homeowners opt to remortgage to save money by locking in more favourable interest rates to save money, or to protect themselves against rising interest rates. Some choose to remortgage because they want to release the equity tied up in their home for a number of reasons. For example, to raise a deposit to invest in another property, to extend or improve their home or simply because they want to access the cash in their home.
By changing lenders, there is a good chance they could get a better rate, meaning lower monthly repayments and considerable savings in the long run.
Just like any financial product, it’s worth shopping around and doing your research to find the best option for your circumstances.
If you want to know more about the ins and outs of remortgaging your property, don’t forget to check out our guide covering everything you need to know.
How far in advance can you remortgage?
When considering a remortgage, one of the first questions most people ask is how far in advance I can consider remortgaging. In general, there is no hard and fast rule for how far in advance you can or should begin the process. Instead, it depends on a variety of factors. For example, if you have built up a large amount of equity in your home and want to access it, remortgaging early could be a good option for you. You will typically need at least 20% equity in your home, although this can vary depending on the lender.
Another factor to consider when remortgaging is the interest rate on your existing mortgage. If you have a fixed-rate mortgage and it’s coming to an end, remortgaging early can give you the opportunity to lock in at a low-interest rate before rates start to rise again. However, you will need to carefully weigh the costs and benefits of remortgaging against other options, such as simply refinancing with your current lender or seeking out a new mortgage from another provider.
Can you remortgage early to release equity in your home?
Yes, it is possible to remortgage your home early in order to release equity. However, there are several factors that you need to consider when making this decision.
First, it’s essential to understand exactly how much equity you have available in your home. This can be determined by calculating the difference between what you owe on your current mortgage and the current value of your property to determine the LTV.
Also, if you have a good credit history and stable income, remortgaging early may be an option that can help you unlock some of the equity in your home. You will need to carefully assess any associated fees or additional costs, such as closing costs or application fees, to make sure that remortgaging is the best financial choice for you.
You’ll also need to consider if remortgaging early will actually save you money in the long run. Depending on the terms of your existing mortgage, you may end up paying more in interest or fees by remortgaging now than if you wait until closer to your current term end. With proper planning and research, remortgaging early may be a smart choice to help unlock some valuable home equity. However, it is crucial to consult with a financial advisor or mortgage expert to determine if a remortgage is the right choice for your specific needs and situation.
Can you remortgage whilst on a fixed rate?
Yes, it is possible to remortgage early whilst on a fixed rate. Depending on your circumstances, it can be a great way to reduce your monthly mortgage payments or access additional funds for home improvements or other expenses.
Several factors will impact your ability to remortgage, including the type of fixed rate you have and the length of time remaining on your fixed term. In addition, some lenders may require you to pay off a specific portion of your mortgage before they will allow you to remortgage, or there may be other restrictions on remortgaging while you are still on a fixed rate.
If you are interested in remortgaging while on a fixed rate, be sure to do your research and speak to a mortgage broker or lender to learn more about your options. With the right preparation and planning, remortgaging while on a fixed rate can be an effective way to reduce your monthly payments.
Closing
If you are thinking about remortgaging early, it’s certainly possible. However, you will need to carefully research your options and choose a lender that fits your needs and financial situation. Working with an experienced mortgage broker can help you navigate the process and find the best remortgage deal for your current situation.
