In This Article
How early can you remortgage your residential property?
As a guide, you can usually apply for a residential mortgage to refinance your property around 6 months before your current deal ends.
For this to happen, you would need a lender that has an offer period on their mortgages of six months.
As some lenders issue their mortgage offers with shorter periods, you need to make sure that it allows ample time to complete the new deal, once the current one ends.
When your current mortgage product expires, you go onto the standard variable rate with your lender.
It is at this point that the solicitors will look to pay back your current lender, once your mortgage deal is outside of the early repayment penalty time frame.
There are a considerable amount of mortgage lenders that can offer a 6-month offer period on a remortgage.
It is recommended that you talk to a mortgage advisor giving them the details of when your current deal expires, so they can look for a lender that offers enough time post offer for you to complete the transaction.
You can also talk to your current bank directly, but their offer periods may not cover the amount of time that you need, so make sure that you explore this properly.
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How early can you remortgage your buy to let property?
It is also possible to apply for a buy to let mortgage to refinance your investment property, when you have approximately 6-months to run on your current deal.
Like a residential remortgage, you need to be aware exactly how long is left on your current deal in order to make sure you have enough time on your expected mortgage offer.
Different buy to let lenders issue mortgage offers with different expiry periods. For instance, some specialist lenders buy to let mortgage offers may only have approximately 60 days before you need to draw down the funds.
Some other buy to let mortgage offers may have 90 days. Again, this would not be suitable if you had 6 months left on your current deal.
This means that it is essential that you choose your lender accordingly in order for the transaction to go through successfully.
It would be recommended to look for a mortgage advisor with experience in buy to let lending to source you a mortgage based on your situation and requirements.
Can I remortgage my property early and pay a penalty?
If you are a long way off from your current product expiring, you may wish to refinance at this time and pay an early redemption penalty.
You are free to repay your mortgage at any time as long as you are willing to incur the early redemption penalty that may be on the account.
The reason a person may consider doing this is to lock into a more attractive rate at this time or take a product that they believe will be more suitable for their needs.
For instance, if you are concerned that rates are increasing and your product was to finish in 1 years’ time, you may be willing to pay an early redemption penalty to refinance at this time, rather than wait another 12 months.
This may mean that you pay a premium depending on what interest rates do. Some borrowers are willing to do this in order to have more certainty over their monthly payments in the future.
When considering a route like this, it is important to factor the cost of your early redemption penalty vs potential savings.
You should take independent mortgage advice if you are considering remortgaging and paying an early redemption penalty.
How early can I take a mortgage product transfer?
Product transfer mortgage is when you remain with your current lender but select a new deal.
You may be on the standard variable rate already, or locked into another product with an expiry date.
Similar to a standard residential remortgage or buy to let remortgage, the amount of time you can apply for a product transfer within, will depend upon the individual lender.
There are lenders that can offer you a product transfer mortgage up to 6 months before your current deal expires.
At this time, it would be prudent to look at what offers are available to you from your current lender and the wider market by speaking to a mortgage advisor.
A common amount of time that a lender allows you to apply for a new rate within the current one expiring, is 3 months.
This should still give you time to refinance to a new lender if needed, however, you may wish to look at your options earlier than this (for example, up to 6 months before).
Some lenders do not allow much time to transfer your deal within, for example, as little as six weeks, making a refinance more urgent should you wish to change lenders.
Your mortgage advisor will be able to tell you your current lender’s product offers, or whether you need to refinance with a new lender.
Can I remortgage one year early?
Although it is possible to remortgage your property 1 year before your current deal expires, you will likely need to pay an early redemption charge for doing so.
The amount of your charge will depend on which lender you are with and the terms on the individual product.
For example, with some lenders, if you were in your 5th year of your 5-year fixed deal, your early redemption penalty may still be 5%, so for a mortgage of £100,000, a penalty of £5,000.
For that same amount of borrowing, with another lender, the penalty maybe 1%, so £1,000.
As you will see, there can be quite a large variance between different penalties, so make sure that you check this out if you were thinking about redeeming a mortgage early.
It may be that it is cost-effective to pay your mortgage off early and swallow the penalty.
However, it is important to take independent advice in a situation so you can be aware of all of your costs and risks.
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Should I use a mortgage broker when remortgaging early?
It would be prudent to use a mortgage broker if you are planning on remortgaging your property before your current rate expires.
If you are planning for the transaction to go through as the current deal expires, you want a mortgage broker to calculate whether you are likely to be successful giving lender’s offer periods and time scales.
If you are remortgaging early and paying your early redemption penalty, you should also take advice on whether it is wise to do so.
You may have your own reasons for doing this, but it is still recommended to talk to an expert to ensure that you have understood all of your options.
You should make sure that your mortgage advisor is regulated by the Financial Conduct Authority, and willing to offer you a free consultation before any chargeable work is undertaken.
Conclusion
If you were looking to remortgage your property, around 6 months is a good benchmark in which to start searching for a new deal.
Not all lenders will issue a mortgage offer with a 6-month completion window, so make sure that you talk to a mortgage advisor about your plans so they can look for a lender accordingly.
You may even wish to remortgage earlier than this and pay your early redemption penalty. If you were doing this, make sure that you fully research your options to be certain that this is the best route for you.
Again, an independent mortgage advisor would be worth talking to, so you fully understand any implications of doing this.
If you were looking to switch your mortgage to a new product with your current lender, you may be able to get a product transfer mortgage.
Some lenders are willing to offer products 6 months before your rate expires, although many offer them 3 months before your deal ends.
Your mortgage advisor will be able to investigate this and confirm.
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