If you are planning to remortgage a home or buy-to-let property, timing is important to maximise your potential savings. Acting too late can mean reverting to your lender's expensive standard variable rate (SVR) when your fixed rate deal comes to an end. On the other hand, acting too soon can mean you have to pay early repayment charges that could cancel out the savings in the most extreme cases. There is also a legal process to carry out before your remortgage goes through, and this should be considered, especially if you intend to time your remortgage for the month that your current mortgage deal ends.

You can typically begin the remortgaging process up to six months before your current fixed-rate mortgage deal ends. Many mortgage lenders issue offers that are valid for three to six months, which allows you to secure a competitive rate in advance and get the legal process started so that the new deal is ready to start on the day your current deal expires.
Starting the process early is a strategic move that can enable you to save money and avoid unnecessary stress. Here, the expert remortgage conveyancing solicitors at JMW explain the potential consequences of remortgaging early, when you can leave your current mortgage provider or existing deal and how you can get a head start on securing a new mortgage before your fixed-term deal ends.

When Can You Start the Process of an Early Remortgage?

You can technically start the remortgage process at any time, although most lenders follow industry guidelines that prevent them from offering a remortgage on a property that has been owned for less than six months. While most mainstream lenders adhere to this, a specialist mortgage broker can often identify lenders who may consider an early remortgage in specific circumstances, such as if the property was inherited or purchased with cash or a bridging loan. It may also be possible to remortgage within six months of the property purchase if significant home improvements have substantially increased the property's value.

However, there are some potential downsides to leaving a mortgage early, particularly before any existing deal ends. Leaving your existing lender or your current deal before the fixed term is over will almost certainly trigger early repayment charges. These charges are designed to compensate the lender for the interest they will lose when you end your mortgage deal early.

These charges are typically calculated as a percentage of your outstanding mortgage balance, often somewhere from 1% to 5%. The exact amount will depend on the terms of your existing mortgage and how much time is left on your fixed rate period, and you can usually find details of any applicable early repayment charges on your latest mortgage statement. There will also be an exit fee charged by your current lender to close your mortgage account in most cases.

Sometimes, the cost to pay an early repayment charge will outweigh any potential savings from switching to a new deal with a lower interest rate. There will also be legal fees, valuation fees for the lender to value your property and an arrangement fee charged by the new lender for the mortgage product. It is therefore essential to calculate your potential savings carefully when pursuing a new mortgage deal, and to time your remortgage to complete only after your current deal's penalty period has expired if you wish to minimise the costs involved and the fees you will need to pay.

How Should You Time a New Mortgage Deal?

Planning your remortgage several months before your fixed-rate term ends allows ample time to explore your options, gather the necessary documentation and complete the process without feeling rushed. The recommended period is six months before your current lender's offer period expires. This is because most fixed-rate mortgage offers last for up to six months, which means that you can have an agreement in place without needing to complete the remortgage before the fixed term ends.

This six-month timeframe also enables your solicitor to have everything ready ahead of time, and comes with several key advantages:

Avoid your lender's standard variable rate

Once your fixed-rate mortgage period ends, your lender will automatically move you onto their SVR. The lender's SVR is almost always considerably higher than the fixed rate you were paying, which means your monthly payments often increase significantly. By arranging for your new mortgage deal to begin as soon as your current one finishes, you can make a seamless transition and avoid paying a higher interest rate on your mortgage repayments, even for a single month.

Secure a favourable interest rate

The mortgage market can be volatile and mortgage rates fluctuate. By starting your search early, you can lock in a new deal when rates are favourable. Some lenders offer flexibility that allows you to switch to a better deal if their rates decrease before your new term officially begins. This can give you peace of mind and the potential for greater savings.

Allow time for the process to complete

Remortgaging, particularly when switching to a new lender, is not an instant process. It involves a full mortgage application, credit checks, a property valuation and legal work. In the worst-case scenario, you may start the process only to find that your outstanding  balance is more than your home is worth and are in negative equity. This can make it very difficult to remortgage, but learning this ahead of time means you can explore more options.

In total, the process of finalising your mortgage deal can take between six and eight weeks to complete. Even if you decide to stay with your current lender and arrange a product transfer, this process can take time to complete, and starting your search early ensures everything can be finalised before your current deal ends.

What Is the Remortgaging Process?

Whether you are switching to a new lender or getting a new deal with your same lender, the process follows several key steps. It is important to work with an experienced solicitor who can represent your interests and while many lenders will offer free legal services from a solicitor they have chosen, it is often best to choose an independent solicitor to act on your behalf.

At JMW, we will support you throughout every stage of the remortgaging process.

1. Gather documents such as proof of identity, recent payslips or accounts and bank statements.
2. You will need to speak to an independent mortgage adviser who can search the market to find the best mortgage deal for your financial situation.
3. The independent mortgage advisor will need to submit your application once you have chosen a product. The lender will perform credit checks and an affordability assessment.
4. The new mortgage lender will arrange a valuation of your property to confirm its worth and determine the loan-to-value ratio, which compares your loan amount with the amount of equity you own in your property.
5. A solicitor handles the legal side of the transaction, which includes paying off your existing mortgage and registering the new mortgage with the Land Registry. If there are local authority searches or other aspects of the conveyancing process that need to be revisited for the new lender, JMW will do this on your behalf. This is the case even if you did not use our conveyancing services when you first bought the property and secured your mortgage.
6. Once all checks are complete, the remortgage is finalised, and your new mortgage term and monthly repayments begin.

There is usually conveyancing work to be done when you switch to a different lender, and sometimes even when you remain with the same lender. JMW has a strong reputation for completing this work quickly and efficiently, which can keep the legal costs down and make sure the remortgaging process is completed on time.