How early can you remortgage? Well, depending on your circumstances, a typical remortgage can take anything between 1 and 3 months, based on how complex a case it is. There can, however, be all sorts of bumps in the road and it is so important to be prepared. A delay in refinancing could be very costly if your current product were to expire and revert to the standard variable rate in the meantime.
With most lenders, you can submit an application 3 months before you are due to remortgage. The first question you would need to consider is this: have your circumstances changed since you last refinanced? What may have been affordable several years ago may not be the case now, as stricter affordability checks have come into place following the regulator’s 2014 Mortgage Market Review. Lenders are now required to go through your income and outgoings with a fine-toothcomb, and it is generally harder to access finance.
Assuming your financial situation hasn’t changed drastically, a like for like mortgage is generally more straightforward.
If you’re looking to switch up your mortgage, it’s important to get a head start. This way, you’ll have more time to scour the market and build up a fuller picture of your options – or, even better, engage a broker to do it for you. If, for example, you are looking to remortgage on an Interest Only basis, any potential new lenders need to check that you have an appropriate repayment vehicle in place. Their assessments can lead to frustrating delays, and it’s best to give yourself at least a few weeks as a safety net.
Early Repayment Charges (ERCs) are the biggest dictator of when you should remortgage, and have been a stumbling block for many an early bird. It is a question of weighing up whether or not to take the hit; sometimes it is worth it, and sometimes it isn’t. The costs can be very high and can make it financially unviable to press ahead, as you typically pay between 1% and 5% of the remaining loan amount. If you are looking to release extra funds, however, this may not be the case and it would be worth running past one of our advisers.
Interest rates are also worth taking into account. Keep one eye on the markets and the Bank of England; if you get wind of an impending hike, it is wise to lock into a lower rate while you still can.
There is no reason why you shouldn’t get started on your remortgage 4 months prior to the required completion, and plenty of reasons why you should. Getting ahead of the game irons out any bumps and helps you to build a picture of which products are available to you based specifically on your circumstances. What’s the worst that could happen? You could be in line to save yourself some money!
If you are thinking about remortgaging or simply want to talk through your options with one of our advisers, please do drop us a line today.