For many homeowners and property investors, the world of mortgages can be a complex and confusing landscape. One common misconception is that you must wait until the fixed term of your mortgage expires before making any changes.
Fixed-term mortgages are popular among homeowners because they offer stability in interest rates for a specified period, typically two to five years. During this time, borrowers enjoy the security of knowing exactly how much they need to pay each month. However, this fixed period doesn't mean you're locked into your mortgage with no room for adjustments.
Contrary to popular belief, you don't have to wait until your fixed term expires to make changes to your mortgage. Here are some options to consider:
Remortgaging: If interest rates have decreased since you took out your mortgage, remortgaging could save you money. Be sure to factor in any Early Repayment Charges (ERCs) to determine if it's financially beneficial.
Product Transfer: Some lenders offer existing customers the option to switch to a new deal with their current lender without incurring ERCs. While this may not always offer the best rates, it can be a convenient and cost-effective option.
Overpayment: If you have the flexibility in your budget, consider making overpayments on your mortgage. This won't change your interest rate, but it can help you pay off your mortgage faster and reduce the overall interest paid.
Mortgage advisors can provide personalised guidance based on your financial situation and goals. They can help you navigate the complexities of your mortgage terms and explore the best options for your needs.
Understanding the terms of your agreement, including any ERCs, is crucial in making informed decisions. Whether you're looking to take advantage of lower interest rates or explore other options, there are ways to optimise your mortgage before the fixed term concludes. In fact most mortgage deals can be secured up to six months before your fixed term ends, so you want to be looking into your options about 9 months before.
Remember to seek professional advice, such as speaking to a broker like ourselves, and carefully evaluate the costs and benefits of any changes you're considering. Your mortgage should adapt to your financial needs, not the other way around.
You may have to pay an early repayment charge to your existing lender if you remortgage.
Your property may be repossessed if you do not keep up repayments on your mortgage.
There may be a fee for mortgage advice. The actual amount you pay will depend upon your circumstances.
The fee is up to 1%, but a typical fee is 0.3% of the amount borrowed.
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