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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.

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By Pete Mugleston  | Mortgage Advisor Pete has been a mortgage advisor for over 10 years, and is regularly cited in both trade and national press.

Updated: 5th September 2019 *

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 turned down an application to borrow more on your mortgage, there are ways out, but every lender applies different rules and there will almost certainly be some penalty.

If you are considering leaving your fixed rate mortgage early, read on to learn what you might expect.

In this article we’ll cover:

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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 lenders will apply an early repayment charge.

If you’re still in the Early Repayment Charge period on your mortgage, a lender might charge 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, the early repayment charge is 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.

What to do if you want to end 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 you’d like to understand more about exiting your fixed rate mortgage early and how charges can vary, get in touch or call us on 0808 189 2301 and talk to one of the whole of market mortgage specialists we work with.

Can you pay off a fixed rate mortgage early?

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.

If you do decide to pay off your fixed rate mortgage early you’ll probably find that your lender will charge an early repayment fee. 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.

What are the penalties of leaving a fixed rate mortgage early?

When you leave a fixed rate mortgage early, it is usual for 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.

Do any lenders offer a fixed rate mortgage with no early repayment penalty charge?

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.

You can save yourself time and some serious legwork by talking to an expert. Call us on 0808 189 2301 or make an enquiry and we’ll put you in touch with a specialist advisor covering whole of market and well placed to help you secure a fixed rate mortgage with no early repayment fee.

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 for exiting a fixed rate mortgage early

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.

If you want to get a better understanding of what you might expect, speak to a specialist. The brokers we work with are experienced across the whole market so get in touch or give us a call on 0808 189 2301. 

Is is possible to renew my fixed rate mortgage early?

It’s worth checking with your lender to find out if you can renew your fixed rate mortgage early. 

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 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. 

Talk to an expert advisor about exiting your 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 to leave a fixed rate mortgage early, make an enquiry or give us a call on 0808 189 2301.

Updated: 5th September 2019
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FCA disclaimer

*Based on our research, the content contained in this article is accurate as of 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 info 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.