The short (and incomplete) answer is that technically, you can remortgage whenever you want. But like so much in life, timing is everything. Well, timing and... fine print.
Here, we’ll dive into when you can remortgage, when the best time is to remortgage, and offer up a few examples where it might be better to sit tight.
When can you remortgage?
If you can afford it, and you meet the new lender’s criteria (or if you’re staying with your current lender, their criteria), you can remortgage at any time. You don’t have to wait until your current deal is coming to an end – but there’s usually a catch.
Remortgaging during your current fixed term often means paying a hefty early repayment charge (ERC). What’s an ERC? It’s a fee that comes with most fixed rate mortgages (though not all), usually starting around 1-5% of your mortgage balance, that lenders charge if you overpay too much, or repay or leave your mortgage before your fixed term ends.
Before you decide to switch in the middle of your fixed term, it’s definitely worth checking the fine print on your mortgage deal to work out any fees you’d pay if you left prematurely, along with the setup fees you’d pay for a new mortgage, would still net you savings (it very well could!) – or if it would be more worthwhile to wait until your fixed deal ends.
Come chat with a Habito remortgage expert – they’ll be able to tell you if switching early will save you some money, or if it’ll lead to paying more in the short or long term. And if it is in your best interest to switch, they’ll sort your whole remortgage for you.
Remortgaging to release equity in your property for renovations? Awesome! Just don’t forget about the bigger picture. When you unlock the cash tied up in your property, you’re essentially borrowing more – which means your monthly repayments may go up, and so might the interest you’ll pay over your whole mortgage term.
It’s worth trying to work out if you’d end up paying back more in mortgage interest on the extra borrowing over, say, 20 years, than you would on a home improvement loan with a higher interest rate over 5. If you can afford the higher repayments in the short-term, a loan might make more sense to fund that dream kitchen or loft conversion.
When should you remortgage?
Knowing when to start the remortgage process can put you on the front foot when it comes to getting the best deals. It also helps you avoid your current lender’s standard variable rate (SVR).
Note: Ending up on your lender’s SVR could mean paying up to double the interest rate you were paying before, and we definitely don’t want that.
So, when should you remortgage? Generally speaking, we recommend looking for a new mortgage deal around six months before your current deal ends. This puts you in the best position, as you’ll have lots of time to weigh up your options and calculate the costs, with plenty of buffer for your remortgage application to be processed and accepted.
And when a lender offers you a mortgage, you’ll typically have between three and six months to accept it, meaning you can time it just right for when your current deal expires.
How long does it take to remortgage?
Finding and applying for the right mortgage deal usually doesn’t take that long, but you have to account for the part that’s out of your control: everything that happens after your application’s been submitted. There’s paperwork to be filed, processes to be followed, and you may also need to have your property revalued if you’re switching lenders.
All told, the whole process can take about 4-8 weeks from start to finish (and with anything in life, sometimes things don’t go according to plan, and it can take longer), so it’s always better to err on the side of caution and give yourself plenty of time to remortgage.
When shouldn’t you remortgage?
We’ve taken a closer look at why remortgaging might not make sense here, including high early repayment charges, a small remaining mortgage, or remortgaging to repay debt.
Here are a couple more situations worth keeping in mind:
You’ve recently changed jobs or employment status
If you’re about to start a new job, you may find it tricky to qualify for a new mortgage, even if your salary has actually gone up. That’s because lenders tend to be a bit spooked by change; they see it as a risk and they know that new jobs can come with probationary periods.
If you’re currently on — or about to go on — maternity or parental leave, lenders will want assurances that you’ll be returning to work eventually and you’ll be able to afford the repayments. They may write to your employer to confirm your return to work date and salary. Some might even ask about future childcare costs. Nosy.
And if you’ve taken the plunge and gone self-employed, you may have to wait until you’ve got a year’s worth of audited accounts to prove your income. Some lenders will want to see up to three years.
Note: These scenarios don’t mean you can’t remortgage, but they do make it more difficult. As we’ve mentioned, it’s all about timing (and the right advice – chat with a Habito remortgage expert to get guidance that’s specific to your unique situation).
Your credit history is poor
Trying to remortgage while a bad credit score drags you down can be demoralising. But while a spotty credit history can hurt your chances of getting a good deal, it’s certainly not a given that you’re shut out of remortgage options.
Before applying for a remortgage, check where your credit is at – you can get a free report from the three main agencies: Experian, Equifax, and TransUnion. Most lenders use one or all of these, so this will give you a good idea of your current situation and what you need to do to improve your credit score.
Note: It’s not impossible to remortgage with bad credit. A missed mobile phone bill from three years ago probably won’t stop you from finding a new deal. On the other hand, something like a County Court Judgement (CCJ) could limit your choice of lenders.
Your best bet is to have a little patience and build up good credit. Most reports only show the previous six years of financial activity, so if you sit tight, you could improve your options.
Can Habito help me decide when to remortgage?
You bet! We know that your mortgage is one of, if not the biggest expense you have each month. If your goal is to lower your monthly costs by remortgaging, then timing is everything.
When you remortgage with Habito, we help you figure out when your current deal ends, when you need your new deal to kick in, and whether or not it’s cheaper for you to switch lenders or stay put (on a different deal). Then, we handle all of the paperwork to make sure you’re moved onto your new mortgage without skipping a beat.
Sounds good, right? And all you have to do is answer a few quick questions to get started.