A lot of people have become house owners through mortgages. A statistic report shows that approximately 6.8 million properties were owned through a mortgage. Generally, a mortgage allows you a secured loan to purchase a property and then the repayment is spread across a period of time. However, if your mortgage is spread across 10 years can you remortgage early? If you can, how early can you remortgage, when can I remortgage my house and when I remortgage can I release equity? This guide provides answers to the above as well as all you need to know in remortgaging.
Can You Remortgage Early?
Can you remortgage early before the time of your mortgage term expires? The answer is yes but then, how can I remortgage early? There are advantages to refinancing. Take for instance a mortgage that is spread across 10 years, during this time, there may be new policies that may possibly reduce the mortgage rate. Refinancing will enable you to benefit from such policies. However, if you want to refinance early, you will have to pay an early repayment charge.
What does it mean to “remortgage”?
To remortgage is another term for refinancing. To refinance simply means to swap from one mortgage to another on the same property. When it comes to refinancing, you can pay off your existing mortgage through another lender or use the same lender to refinance.
Why do I Need To Remortgage?
There are several reasons why people refinance their property. Some Of the reasons include the following;
Mortgage Term About To End
No one wants to be on the mortgage provider standard variable rate. The rate is mostly higher than your original mortgage rate. Therefore, you should avoid this at all costs. Refinancing may be an option when your mortgage term is about to end and you are yet to pay off your mortgage loan.
Early Mortgage Payment
This does not happen often. It is refinancing in order to pay off the mortgage early. You probably want to clear off the mortgage faster than the specified time.
Increment in Equity (value of property)
You can also remortgage when your house increase in equity. This will lead to a lower loan to value ratio and thereby, or ur repayment rate.
To Avoid Unforeseen Circumstances
People also refinance to avoid unknown future occurrences. This may include an increase in repayment rate or other situations that will make one unable to pay their mortgage loan.
Better Deals
People also remortgage because their payment option is high and they need a lower monthly repayment option. This will help them manage their finance and pay attention to other needful expenses.
More Loan Options
You can borrow more than your initial mortgage. According to UK Finance’s mortgage lending trends, over 20% of property owners remortgaged with additional borrowing in May 2019 than the same month last year.
How Early Can You Remortgage
After receiving the duration of the mortgage repayment term, how early can you remortgage your property? If you intend to remortgage early for any reason, you will have to pay an early repayment charge. Now how early can you remortgage your property? “You can refinance your property three to Six months into your mortgage term”.
How To Remortgage Early
Have you made up your mind on refinancing, how early can you remortgage? You can remortgage early, following these steps.
Identify Why You Want To Refinance
Firstly, you have to identify the reason why you want to remortgage your property. Understanding your reason will help you in selecting the best refinancing option. Do you want to remortgage because your tenure is about to expire or the increase in equity or to pay off the loan faster? identify your reason.
How Much Mortgage Term Do I Have Left?
You will have to make sure your mortgage term still have at least three months interval to expire. This will give you adequate time to conclude the process before the term expires.
Same Mortgate Provider Or New Lender
Decide Whether you want the same mortgage provider or switch to a new lender for your early remortgage plans. Both have their benefits, you can check out both before signing a new deal.
Browse Through your mortgage Document
Going through your current deal will help you define the scope of your new mortgage deal. You also become familiar with your interest rate as well as other charges.
Contact A No-Fee Broker
There are fees and penalties that come with an early remortgage. A broker calculates this, highlight whether remortgaging will be beneficial to you or not as well as point out mortgage lenders with great deals in case you want a different lender.
Consult Your Lender
Your current lender may present better deals that will likely match your present needs.
Contact The Service Of A Conveyance Solicitor
Using the service of a conveyance solicitor is needful especially if you decide to switch lenders. Generally, they take care of the legal process of product transfer.
Refinancing Which is Better, Same lender or A Different Lender
Using the same mortgage lenders is advantageous in several cases. If you are doing it to save money, you can move to a different deal with the same lender. It is much easier this way than moving to a new lender. However, you can always switch to a different lender under same or different circumstances.
When Can I Remortgage My House
As long as your current mortgage is up to three to six months, you are free to remortgage your house.
Possible Fees To Consider When You Remortgage
These are the possible fees you may be asked to pay when you want to remortgage a house early.
#1. Early payment Charge
This is the fee you pay for leaving the mortgage term before its expiration.
#2. Exit Fee
Most mortgage comes with an exit fee. It is the fee you have to pay for exiting the ideal.
#3. Arrangement Fee
The arrangement fee comes with the product. It can be paid with your mortgage on a monthly basis or at the end of your term agreement.
#4. Valuation Fee
There are lenders that charge an extra fee to value the property before giving out a mortgage.
#5. Broker Fee
This is the broker charge for his services.
When I Remortgage Can I Release Equity
It is best to consider equity release as a last resort when other options fail because equity release generally influences any state or local government payments you get and this may get to your inheritance. But before we delve into whether I can release equity when I remortgage my house, What is equity?
What Is Equity?
The value of your house on which you do not owe a mortgage is referred to as equity.
What Does It Mean To Release Equity?
Equity release is a method of keeping a house or other asset with a capital value in use while receiving a lump sum or a steady stream of income from the house’s value.
When I Remortgage Can I release Equity?
Generally, you can release equity when you remortgage early, however, it must have an interval period of six months. Furthermore, it will be easier to get a mortgage when the value of your house is than your desired mortgage loan.
How Do I Access My Equity?
To release equity on your home, you may consider selling off your home. It comes with one advantage though, you are allowed to occupy the property till it is time for health care or when the last occupant of the house dies. For more on Remortgaging to release equity, click here.
Conclusion
You can remortgage your property early either to release equity or just to simply pay off your existing mortgage as well as have a new interest rate. Most often, you get better deals when you remortgage even though it comes with extra costs.
FAQs On Can I Remortgage Early
Can I remortgage early without penalty?
How can I avoid paying the ERC when I remortgage or move house? You can’t avoid paying the ERC unless you wait until your mortgage deal ends and no fee applies. However, if you’re switching mortgage to get a much better deal, you may find that over time the lower interest rate outweighs the cost of the ERC
Does remortgaging count as early repayment?
The best time to find a remortgage deal is usually when the tie-in period on your existing deal ends. … But if you remortgage before the end of your introductory deal, you’re likely to be hit with heavy early repayment charges. But you can still time it to move immediately once your existing deal ends
Can I remortgage early?
If you’re wondering “can I remortgage early?” the answer is yes. You can remortgage at any time
