Should You Remortgage Early?
The latest industry news and guides from Active Mortgages.
The latest industry news and guides from Active Mortgages.
A homeowner approached us after spending several years on a five-year fixed-rate mortgage secured during a period of rapidly rising interest rates.
Their current mortgage rate was around 6.5%, significantly higher than rates becoming available in the market. With rates beginning to ease, they wanted to understand whether remortgaging early would be financially worthwhile despite having around two years remaining on their fixed-rate deal.
The property was valued at approximately £350,000, with an outstanding mortgage balance of around £285,000.
The client’s main concern was whether the potential savings from a lower interest rate would outweigh the costs of leaving their current mortgage early.
Key considerations included:
While lower mortgage rates were available, the overall financial picture needed careful analysis to determine whether switching lenders would genuinely save money.
Rather than focusing solely on headline interest rates, we carried out a true cost comparison.
We assessed:
Although a remortgage could reduce the client’s monthly payments, the savings were largely offset by the cost of the early repayment charge and associated fees.
After reviewing the figures, it became clear that remortgaging immediately would deliver little to no financial advantage.
Following a detailed cost analysis, the client decided to remain on their existing mortgage product for the time being.
Rather than proceeding with a remortgage that offered limited benefit, a review was scheduled for a later date when:
This approach allowed the client to avoid unnecessary costs while keeping future options open.
Many borrowers focus on securing the lowest available interest rate, but the cheapest rate doesn’t always produce the best financial outcome.
In this case, a detailed review demonstrated that paying a significant ERC would effectively cancel out most of the savings available through a new mortgage deal.
By taking a transparent, advice-led approach, we helped the client make an informed decision based on overall cost rather than headline rates alone.
Sometimes the best advice is not to remortgage immediately, but to wait until the timing is right.
Book a call with one of our team to talk about your requirements.
