Can I Remortgage Early?

Needing to remortgage or move house before your current deal ends can be a real issue because of early repayment charges. These fees can be thousands of pounds, but there are ways to avoid them.

This guide provides clear, actionable advice on how to legally avoid or minimise a huge early repayment charge, so you can remortgage or sell your property when you need to.

What is an Early Repayment Charge (ERC)?

An ERC is a fee your lender charges if you repay your mortgage before the agreed-upon term ends. This is designed to compensate the lender for the interest they lose when you leave your deal early.

ERCs are typically calculated as a percentage of the outstanding mortgage balance, usually between 1% and 5%.

For more details, you can read our Early Repayment Charge article.

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Porting your mortgage

This is the most common way to avoid paying an early repayment charge when you want to sell your property and buy another.

Porting your mortgage means you take your existing mortgage product and rate with you to the new property.

However, it is not always a straightforward process. Your lender will still assess your new loan application based on its current lending criteria.

You will also need to port a mortgage of an equal or greater amount to your existing one. If the new mortgage is for a smaller amount, you will have to pay the ERC on the difference.

The main benefit of porting your mortgage is avoiding the early repayment charge. It also allows you to keep the preferential interest rate you already have.

However, the main drawback is that you are limited to your current lender's product range. They may not offer the most competitive rates on the open market, and you still have to meet their current lending criteria.

The lender's position

Not all lenders allow porting, and their terms and conditions differ. Here’s a summary of some lender positions:

• Halifax Bank Plc: You can apply for a new loan on another property and take your existing product and ERC with you. This is subject to meeting their current lending criteria.
• Metro Bank Plc: You may be able to transfer the outstanding balance to a new property, provided you still meet their lending criteria. They may waive the ERC if the new mortgage completes within 30 days of the old one being paid off.
• Virgin Money: You may be able to transfer the remainder of your mortgage product to your next property. However, this is subject to certain conditions, such as purchasing a new property to let out and completing the new loan within three months of repaying the old one.
• National Westminster Bank Plc: You have the possibility of porting your existing mortgage product(s) to a new property, subject to their terms.
• Nationwide Building Society: If they can offer you a new loan, you can keep your existing mortgage product and will not have to pay an ERC if you transfer the balance and terms for the remainder of your Benefit Period.

Asking your lender to waive the Early Repayment Charge

This method is less common, but it is still possible to get your lender to waive the early repayment charge, especially if you are close to the end of your fixed-rate period. There is no guarantee they will agree to this, but some lenders do.

Lenders are most likely to consider this if you have a strong track record of payments and are only a few months away from the end of your deal.

You need to contact your mortgage lender’s redemption or repayment department and get their written authority that they will agree to waive the charge. If they agree, they will provide the authority in writing.

Our top tip: Organise your next mortgage early

If you are unable to port your mortgage or get your lender to waive the fee, you will likely have to wait for your early repayment charge period to expire. However, it is a good idea to start the remortgage process early.

You should begin to organise your new mortgage 3 to 6 months before your existing deal ends. Mortgage offers are normally valid for 6 months, and it can take 3 to 4 weeks to get a new mortgage offer.

By getting an offer for a new, better rate and then waiting for your ERC period to expire, you can ensure a seamless transition without paying any penalty.

Risks of waiting too long

If you wait until the last minute to organise your remortgage, you run the risk of your current fixed deal ending before your new one is in place.

This can force you onto your lender's higher Standard Variable Rate (SVR), which can be significantly more expensive. It also means you may have to rush the process, leading to potential delays or issues.

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