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Leaving a Fixed-Rate Mortgage Early

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Pete Mugleston

Author: Pete Mugleston - Mortgage Advisor, MD

Updated: June 28, 2022

There are many reasons why you might want to get out of a fixed-rate mortgage early. Perhaps you want to remortgage with another lender, or maybe you no longer want a mortgage at all and are planning to sell your property and move into rental accommodation?

Whatever the reason, we’re here to help, and in our guide to leaving a fixed-rate mortgage early, you’ll learn under what circumstances this is possible, what the implications of exiting your current agreement could be, and where to get professional advice about this.

Can you leave a fixed-rate mortgage early?

Yes. It’s possible to get out of a fixed-rate mortgage during the introductory rates period under a number of different circumstances, but the vast majority of the time, leaving a fixed agreement early means paying early repayment charges (ERCs) and sometimes other fees. Since leaving a fixed-rate mortgage during the initial rates period usually means being hit with fees, it’s a good idea to seek professional advice from a broker before pressing ahead.

Common reasons why somebody might want to leave a fixed-rate mortgage include…

Read on for more information or use the menu above to jump to our guide page for each topic.

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Possible consequences of leaving early

If you were to exit your fixed-rate mortgage while locked into an introductory rates period, the main consequence would usually be having to pay an early repayment charge. This is normally a percentage of the loan amount, typically somewhere between 1% and 5%.

The exact amount you’re charged can also vary depending on how far into the initial rates period you are. The longer you’ve got left, the higher the fee is likely to be. So, as a general rule, two-year fixes are cheaper to sever early than mortgages with five-year fixes or higher.

There could also be additional costs to factor in, depending on why you want to exit your fixed-rate mortgage early, and they can include the following…

  • Completion fees:  If your plan is to pay off your entire mortgage balance to own the property outright, there might be an extra fee to close your account and remove the lender’s charge from your home. This is typically charged at between £50 and £200.
  • Legal fees: Remortgages can call for a solicitor in some circumstances, such as moving to a new lender, and their services can mean paying an extra fee on top of the ERC.
  • Valuation fees: Sometimes payable if you’re leaving a fixed-rate mortgage to move to another lender, as the new mortgage provider will want to assess the property’s value.

One of the main benefits of using a mortgage broker is that they can help you avoid any unnecessary fees. They can flag up any financial penalties you may face and offer advice on how to avoid them. For example, if you’re refinancing, your broker could find you a lender who offers free legals and valuations as part of a remortgage package deal.

How to get out of a fixed-rate mortgage early

Whatever the reason you want to get out of your mortgage before the fixed-rate period is up, the steps you need to take are as follows…

  1. Find out how much you’d have to pay in fees: This is important as any fees will need to be factored into the overall cost of your plans. You can find out how much you will have to pay to exit your mortgage by contacting your lender or checking your paperwork.
  2. Find a mortgage broker: By using a mortgage broker you can avoid paying any unnecessary fees and increase your chances of achieving your plans. If you’re looking to remortgage, get a homemover’s mortgage or remove yourself from a joint fixed-rate agreement following a separation, a broker can help you through the process and potentially save you time, money and marks on your credit report along the way.
  3. Let your broker take it from here: A big benefit of using a broker is that it can save you a lot of legwork, and they’ll take the lead from this point and guide you through every step. If you need to remortgage or need a new mortgage to move house, they will make sure you get the best deal and negotiate the most favourable rates for you.

Make an enquiry with us and we’ll match you with the right mortgage broker for free.

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Refinancing during a fixed-rate period

It’s sometimes possible to renew a fixed-rate mortgage early and lock yourself into a new deal with your current mortgage lender without penalty, depending on the terms and conditions you agreed to. But there would usually be some sort of fee to pay if you want to remortgage and switch mortgage providers or refinance your agreement significantly early.

You can read more about this – including how to refinance a fixed-rate mortgage and how a broker can help you out – in our guide to remortgaging a fixed-rate mortgage early.

Paying off a fixed-rate mortgage early

You can pay off a mortgage while locked into a fixed rate to own your property outright, but you’ll probably find that your lender will request an early repayment charge and potentially an extra fee to close your account and remove their charge from the property. The total fees 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 charges or exit fees, and the amount it will cost you to pay off your mortgage during a fixed rate should be offset against the amount you’ll be saving in interest payments by clearing your debt straight away.

Key takeaways from this guide

  • 01

    You can leave a fixed-rate mortgage early, but at a cost:

    There are nearly always early repayment changes and sometimes other fees to pay if you want to leave a fixed-rate mortgage during the introductory rates period.
  • 02

    Using a mortgage broker is recommended:

    They can help you avoid unnecessary fees and ensure you get the best deal if you’re remortgaging or need a new mortgage to buy your next home, if the reason you’re leaving your fixed rate is to move house
  • 03

    We can match you with the right broker:

    There are brokers who specialise in helping people get out of fixed-rate mortgages and they have the expertise you need to achieve your goals. We offer a free broker-matching service that can pair you with one of these mortgage advisors, someone we’ve handpicked and fully vetted beforehand.

Call 0808 189 2301 or make an enquiry to get matched with your ideal broker today.

FAQs

Can I get a fixed-rate mortgage with no early repayment charges?

Yes, these do exist but they’re few and far between. If you do come across a mortgage lender offering fixed-rate deals with no ERCs, be sure to check what other charges they come with as the mortgage provider will likely add some caveats to the agreement to safeguard themselves.

Will I pay an early repayment charge if I’m porting my mortgage?

If you have a portable mortgage and decide to move it to another property, ERCs can be avoided. They might, however, apply if you’re only moving part of your mortgage to your new home or if there’s a delay between the sale of your old home and the purchase of the new one.

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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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