You can start looking for and arranging a new mortgage several months before your current deal ends. However, to remortgage without an early repayment charge (ERC), you will usually need to wait until the ERC period on your existing mortgage has expired before completing the switch.

This means there is an important difference between securing a new mortgage deal early and actually completing your remortgage early. Starting the process in advance can give you time to compare mortgage rates, apply to a new lender and complete the necessary legal work while arranging for the new mortgage to begin after your existing deal ends.

Here, the experts at JMW explain how early you can remortgage without penalty, when an early repayment charge may apply and what to consider before switching to a new mortgage deal. We also outline when to start the remortgage process and how our remortgage solicitors handle the legal work involved in moving to a new lender.

What Is an Early Repayment Charge?

An early repayment charge is a fee that a mortgage lender may charge if you repay some or all of your mortgage before an agreed date. This commonly applies when you leave a fixed-rate or discounted mortgage deal early.

ERCs are often calculated as a percentage of the outstanding mortgage balance, although the precise method depends on the mortgage product. The percentage may also decrease at different stages of the deal.

For example, an ERC calculated at 2 per cent on an outstanding mortgage balance of £200,000 would amount to £4,000. Even if a new deal offered a lower interest rate, you would need to consider whether the resulting savings justified paying that charge.

For a more detailed breakdown, read our guide to how much it costs to remortgage in the UK.

How Early Can You Remortgage Without Paying an Early Repayment Charge?

This will depend on the terms of your current mortgage. You can usually start the remortgage process around six months before your current mortgage deal ends. However, you will need to complete after your ERC period expires if you want to avoid paying an early repayment charge.

For many homeowners, the ERC period runs alongside an introductory or fixed-rate mortgage deal. If you repay the outstanding mortgage balance while that period still applies, your existing lender may charge you for leaving the deal early.

For example, suppose your current fixed deal ends in six months. You may be able to start looking for a new mortgage now, secure an offer and arrange the legal work, but set completion for after your existing deal ends. This allows you to move directly onto the new mortgage without spending time on your current lender's SVR.

You should check your current mortgage offer or contact your existing lender to confirm:

• The date your current deal expires.
• Whether an early repayment charge applies.
• The date on which the ERC period ends.
• How the ERC is calculated.
• Whether the charge reduces as your current deal approaches its end.
• Any other exit fees that apply when you redeem the existing mortgage.

Do not assume that the fixed-rate end date and ERC expiry date are identical without checking your mortgage terms.

How Far in Advance Can You Arrange a New Mortgage Deal?

It is sensible to start reviewing your mortgage around six months before your current deal ends. This gives you time to compare the options available without necessarily triggering an early repayment charge.

MoneyHelper recommends shopping around six months before your deal ends to avoid automatically moving onto your lender’s SVR.  The FCA also notes that an accepted mortgage offer will normally remain valid for between three and six months, depending on the mortgage lender.

However, a mortgage offer lasting six months does not mean every lender will allow you to secure every mortgage product six months in advance. Lenders set their own criteria, application periods and offer expiry dates.

Starting early gives you time to:

• Review your current mortgage deal and ERC.
• Speak to a mortgage broker or financial adviser.
• Compare products from your current lender and other lenders.
• Make the initial mortgage application.
• Complete affordability and credit checks.
• Arrange the lender's property valuation.
• Receive and review the mortgage offer.
• Complete the legal work if required.
• Arrange completion for an appropriate date.

Starting early gives you the chance to put everything in place so that the new mortgage takes effect at the right time.

Should You Remortgage Before Your Current Deal Ends?

Remortgaging before your current deal ends could make financial sense in some circumstances, even if you need to pay an ERC. This will depend on whether the benefits of the new mortgage outweigh the penalty and other costs involved in changing early.

When considering an early remortgage, some of the main factors to consider include:

How much is the early repayment charge?

Start with the amount you would actually have to pay.

Your mortgage documents should explain how the ERC works. You can also ask your current lender for the amount that would apply if you redeemed the mortgage on a particular date.

Because some ERCs decrease during the mortgage deal, waiting a few months could substantially change the calculation.

How much could the new mortgage save?

A lower interest rate could reduce your monthly mortgage payments, but the headline rate does not tell you the full cost.

Compare the potential savings with the ERC and any fees associated with the new mortgage. Costs such as arrangement fees and early repayment charges can make a seemingly cheaper mortgage less cost-effective overall.

What other remortgaging fees will you pay?

Take account of all the costs involved rather than comparing interest rates alone.

A new mortgage may come with arrangement fees, valuation fees or legal costs. Your current lender may also charge an exit fee.

Some lenders offer free valuations or other incentives when customers switch to them, but you should still compare the total costs of the mortgage.

How long is left on your current deal?

The length of time remaining can have a major influence on whether leaving early makes sense.

If the existing deal ends shortly, paying an ERC to access a cheaper mortgage for only a brief period may produce limited savings. Waiting until the ERC expires could be more cost effective.

The calculation may look different if there is much longer left on an expensive current deal and substantially cheaper mortgage rates are available.

What Happens When Your Fixed Mortgage Deal Ends?

If your fixed-rate mortgage deal ends and you have not arranged another product, you will normally move onto your lender's reversion rate. This is often the lender's standard variable rate (SVR), although lenders can use other types of reversion rate.

An SVR is often higher than the fixed rate you were previously paying. The lender can also change a standard variable rate, so your monthly mortgage payments may rise or fall over time.

This is one of the main reasons to review your mortgage before the current deal expires.

Starting several months beforehand can give you time to compare the market and arrange a new deal that begins when the existing deal ends, rather than waiting until you have already moved onto the lender's SVR.

Should You Stay With Your Current Lender or Switch to a New Lender?

When your existing deal approaches its end, you may be able to take a new mortgage product with the same lender or move your borrowing to a different lender.

The two routes work differently:

A product transfer may be suitable if your current lender offers a competitive deal and you do not need to make wider changes to your borrowing.

Switching to a new lender can open up more mortgage products, but the lender will assess your application against its own affordability and lending criteria.

When Might Remortgaging Early Make Sense?

There are several reasons why a homeowner might investigate remortgaging before their existing deal ends.

These include situations where:

• Interest rates have fallen: A substantially lower interest rate may create potential savings despite an ERC.
• You want greater certainty over your mortgage payments: You may prefer to lock in a new fixed rate rather than remain on a variable mortgage.
• Your circumstances have changed: A mortgage that suited you several years ago may no longer meet your borrowing needs.
• You want to release equity: An increase in the value of your property or a reduction in your outstanding balance may allow you to borrow additional funds.
• You need a different mortgage product: Your priorities around repayments, overpayments or the mortgage term may have changed.

For example, homeowners sometimes release equity by remortgaging for home improvements or to fund another purchase.

However, remortgaging early is not automatically beneficial simply because a cheaper interest rate is available. An ERC and the other remortgaging fees can reduce or eliminate the potential saving.

When Might it Be Better to Wait Until Your Current Deal Ends?

Waiting until the current mortgage deal ends will avoid an ERC and make the overall switch cheaper.

It may be worth waiting where:

• The ERC on the current mortgage remains substantial.
• Only a short period remains before the ERC expires.
• The savings available through a new mortgage would not outweigh the costs involved.
• Waiting could improve your loan-to-value position.
• Your current circumstances may prevent you from accessing a better deal at present.
• You expect to move house shortly and do not want to commit to another mortgage product without considering whether it can be ported.

You do not necessarily have to choose between doing nothing now and paying to leave immediately.

The third option is to start preparing and secure a suitable new deal in advance, then complete after the ERC period expires. This is why the months before a fixed deal ends can be valuable even where you have no intention of paying an early repayment charge.

What Could Affect Your Ability to Remortgage Early?

Finding a cheaper mortgage rate does not mean that the lender will necessarily offer that product to you. A lender will assess your circumstances and the property before approving the new mortgage.

Factors that can affect your options include:

• Loan-to-value (LTV): Your LTV compares the outstanding mortgage balance with the property's value. A lower LTV can give you access to a wider range of mortgage products and potentially better rates.
• Outstanding mortgage balance: A relatively small balance may mean the savings from switching are outweighed by arrangement fees and other costs.
• Income and affordability: A new lender will consider whether you can afford the mortgage repayments.
• Credit history: Lenders may review your credit report and credit file as part of the mortgage application.
• Property value: The lender may require a valuation before agreeing to lend.
• Negative equity: If your outstanding mortgage balance is higher than the value of the property, switching to another lender can be particularly difficult.
• Additional borrowing: Asking to release equity or borrow more money may affect the lender's affordability assessment and the LTV of the new mortgage.

You can read more about how negative equity affects remortgaging in our dedicated guide.

What Is the Process of Remortgaging Early?

The practical process will depend on whether you stay with your current mortgage lender or switch to a new lender. If you are moving to a different lender, the main stages are usually as follows:

1. Check your current mortgage: Confirm when the existing deal and ERC period end, your outstanding mortgage balance and any exit fees.
2. Compare your options: Consider the rates and fees available from your current lender and other mortgage lenders. A mortgage broker or financial adviser can help you assess the financial options.
3. Apply for the new mortgage: The lender will assess your circumstances, affordability, credit history and the amount you want to borrow.
4. Complete the valuation: The new lender will usually need to establish whether the property provides adequate security for the mortgage.
5. Receive the mortgage offer: Check the expiry date and any conditions attached to the offer.
6. Complete the legal work: Your solicitor deals with the existing mortgage and the legal requirements set by the new lender.
7. Redeem the existing mortgage: On completion, the outstanding balance owed to your old mortgage lender is repaid.
8. Complete the new mortgage: The new mortgage takes effect and the necessary Land Registry requirements are dealt with.

Starting the remortgage process before your existing deal ends can make it easier to coordinate the completion date with the expiry of your ERC.

Do You Need a Solicitor to Remortgage?

If you switch to a new mortgage lender, legal work will normally be needed to redeem the existing mortgage and put the new lender's security in place.

Our residential property solicitors handle the legal aspects of the remortgage. This includes:

• Checking the title to the property.
• Obtaining a redemption statement for your existing mortgage.
• Reviewing the new mortgage offer and lender requirements.
• Carrying out any searches or other checks required for the transaction.
• Arranging for the existing mortgage to be repaid.
• Dealing with the new mortgage funds.
• Registering the new lender's charge with HM Land Registry.

The legal requirements can differ where you stay with the same lender and simply switch mortgage products.

JMW's role is separate from that of a mortgage broker or financial adviser. A broker or adviser helps you consider the mortgage products and financial implications, while our solicitors handle the legal work needed to complete the transaction.