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Getting Out of a Fixed Rate Mortgage Early

How to get out of a fixed rate mortgage and what to look out for when exiting.

No impact on credit score

Pete Mugleston

Author: Pete Mugleston - Mortgage Advisor, MD

Updated: June 16, 2021

If you’re considering exiting your fixed-rate mortgage early because you think you can get a better deal elsewhere or your current lender has declined a mortgage application to borrow more, there are ways out, but every lender applies different rules and there will almost certainly be some penalty.

In our guide, we look at what you might expect, what you should consider, and where to turn for the right advice.

Can you get out of a fixed rate mortgage early?

Yes, it may be possible to leave your fixed rate mortgage early but (and it’s a big but) most mortgage lenders will apply an early repayment charge. If you’re still in the Early Repayment Charge period on your mortgage, a lender might hit you with fees even if you only want to change the amount you are borrowing.

The way this charge is applied varies from lender to lender. Often, it’s a percentage of the loan, usually between 1-5%.

You will need to read your mortgage agreement small print or contact your mortgage lender to find out specific charges and how any early repayment charge might impact your decision to exit your fixed rate mortgage early.

Possible penalties

When you leave a fixed rate mortgage early, it is usual for mortgage lenders to apply an early repayment penalty.

Although every lender sets their own rules when applying the early repayment penalty on a fixed rate mortgage, it would be unusual to find a fixed rate mortgage with no early repayment fee.

Fixed rate mortgages with no early repayment penalty charges

The majority of lenders apply some kind of early repayment penalty, but you can sometimes find a lender offering fixed rate mortgages with a 0% penalty charge. Because there are so few lenders offering this option, they can be hard to find, but not impossible if you seek specialist advice.

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How to leave a fixed rate mortgage early

Once you have worked out any potential exit charges which might apply, and still think it will pay to walk away, contact your mortgage lender directly. The funds from the new mortgage will repay the existing mortgage, which won’t/can’t end until full repayment has been made.

If your lender tells you that you can’t leave your mortgage early or says you’ll be fit with high fees, it’s worth making an enquiry with us so we can match you with a mortgage broker who specialises in fixed rate agreements. They will be able to tell you what your options are and help you make the most cost-effective decision.

Can you pay off a fixed rate mortgage early?

Yes, but if you do decide to pay off your fixed rate mortgage early you’ll probably find that your lender will charge an early repayment charge (ERC). The total fee will usually depend on how long is left on the fixed rate period, as this is what’s used to calculate the ERC.

Even though you are effectively paying back the money you have borrowed, it is unusual to find a fixed rate mortgage with no early repayment fee.

If you find yourself in the fortunate position of being able to afford to pay off a fixed rate mortgage early you should first consider repaying any expensive debts.

Paying off your mortgage early may sound like a great idea but it doesn’t come without drawbacks. You may find it more beneficial to invest the money for the future instead, but you should talk to an expert before making any decisions.

What sort of fee might apply if I end my fixed rate mortgage early?

The most common fee applied when ending a fixed rate mortgage early is an Early Repayment Charge or ERC.

Early repayment charges vary between lenders and will depend on the terms of your mortgage. Typically, the charge will be calculated as a percentage of the loan amount, with a repayment mortgage the amount you’re liable for decreases over time, so is likely to reduce as you approach the end of the agreement.

Other fees will vary depending on your lender, so it’s worth checking the terms of your mortgage agreement for any hidden costs which might be charged if you want to come out of your fixed rate mortgage early.

Special circumstances where fees might not apply

Every lender has different rules about how they handle borrowers exiting a fixed rate mortgage early.

The most common fee applied when you leave a fixed rate mortgage early is an Early Repayment Charge. Some lenders may waive the ERC in the event of death.

If you wish to exit a fixed rate mortgage early you should review the terms of your mortgage to see if charges are waived in certain circumstances, or contact your mortgage lender directly.

Is it possible to renew my fixed rate mortgage early?

Potentially, though it’s worth checking with your mortgage lender to find out if you can renew your specific fixed rate mortgage agreement early. Some mortgage products give you this option, but it depends on the terms and conditions you agreed to.

If you’re happy with the current terms of your mortgage and want to ensure you can retain the current rate when you refinance, without incurring any fees or charges, then you may be able to do so without further mortgage credit checks or reviews.

Or you could find out if there’s an even better deal which you could get instead. The brokers we work with are experienced in finding the best mortgage deals across the whole market and are well positioned to find the best deals around.

Speak to an expert about exiting a fixed rate mortgage

If you want to find out more about what your options might be as you consider exiting a fixed rate mortgage early or would like further advice on whether you can leave a fixed rate mortgage early, make an enquiry or give us a call on 0808 189 2301.

We can match you with a fixed rate mortgage expert for free. They will be able to go over every option with you, offer you bespoke advice about whether exiting your mortgage early is the right decision, and help you make the most cost-effective decision.

An initial consultation with a broker from our network won’t cost you a penny, there’s no obligation to act on their advice and it won’t leave any marks on your credit report.

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About the author

Pete, an expert in all things mortgages, cut his teeth right in the middle of the credit crunch. With plenty of people needing help and few mortgage providers lending, Pete found great success in going the extra mile to find mortgages for people whom many others considered lost causes. The experience he gained, coupled with his love of helping people reach their goals, led him to establish Online Mortgage Advisor, with one clear vision – to help as many customers as possible get the right advice, regardless of need or background.

Pete’s presence in the industry as the ‘go-to’ for specialist finance continues to grow, and he is regularly cited in and writes for both local and national press, as well as trade publications, with a regular column in Mortgage Introducer and being the exclusive mortgage expert for LOVEMoney. Pete also writes for OMA of course!

Read more about Pete

Pete Mugleston

Mortgage Advisor, MD

FCA disclaimer

*Based on our research, the content contained in this article is accurate as of the most recent time of writing. Lender criteria and policies change regularly so speak to one of the advisors we work with to confirm the most accurate up to date information. The information on the site is not tailored advice to each individual reader, and as such does not constitute financial advice. All advisors working with us are fully qualified to provide mortgage advice and work only for firms who are authorised and regulated by the Financial Conduct Authority. They will offer any advice specific to you and your needs.

Some types of buy to let mortgages are not regulated by the FCA. Think carefully before securing other debts against your home. As a mortgage is secured against your home, it may be repossessed if you do not keep up with repayments on your mortgage. Equity released from your home will also be secured against it.

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