Exiting a fixed rate early

We’ve put together this guide to answer any questions you might have on fixed-rate mortgages and
what happens when you leave one early.

What is a fixed rate mortgage and how do they work?

A fixed-rate mortgage is a deal offered on a mortgage wherein the interest rate you pay remains the
same for a fixed period of time, usually 2-10 years – but this often varies between lenders. The most frequent fixed-rate mortgage products on the market span a 2-5 year period.
This means that your mortgage repayments should remain the same month-to-month during the term of your fixed-rate, which households often find useful when it comes to budgeting and calculating expenditures.

What happens when my fixed rate period ends?

When your mortgage comes to the end of its fixed rate period, your interest rate will most likely be
moved onto your lenders standard variable rate (SVR). The SVR is often higher than the majority of
fixed-rate deals as it’s determined by each individual lender and can be subject to change.

Can I leave a fixed rate mortgage early?

You can usually leave a fixed rate mortgage early – however, lenders usually require an early
repayment charge and an exit fee.

What happens if I leave a fixed rate mortgage early?

There will likely be a pre-agreed span of time on your mortgage where if you decide to repay your
mortgage early, you will also need to pay an early repayment fee. There is also often an exit or
closure fee when you repay or exit your mortgage.

How much will my early repayment charge be?

The total sum of your early repayment charge will vary based on your mortgage agreement and
lenders terms, but will usually be 1-5% of the value of your mortgage.
So, if you had a £200,000 mortgage with a 3% early repayment charge, you would pay £6000.

Is it worth leaving my fixed rate mortgage early?

This depends on what you’re paying now, how much your early repayment charge would be and what mortgage products you could potentially be approved for.

If you’ve worked it out and the cost of the early repayment fee still results in a cheaper mortgage
over time, or you need to raise cash by remortgaging for an emergency, then it could be well worth seeking to leave your fixed rate early, but on the other hand the early repayment fee might make
the cost of finding a new mortgage unviable, or you could already be on the best rate you can access. With all these factors in play, specialist brokers can be incredibly useful when it comes to
navigating the market and providing accurate information and guidance. Brokers, like the ones at
Clever Mortgages, have access to a wide range of lenders, products and exclusive deals. Our brokers
can help you understand which lenders are likely to approve you, advise on the right mortgage
product for you and help you find it. Request a call back?

Can I get a fixed-rate mortgage without an early repayment charge?

In theory, yes- however mortgage products vary and it’s unlikely you’ll find a fixed-rate mortgage without an early repayment penalty, that’s not to say they don’t exist though.

When lenders provide you with a mortgage they are making an investment in you and your home, this investment is made viable in the interest that you pay over the term of your mortgage, so the early repayment charge is often there to ensure the loan you are taking is viable for the lender.

Can I renew my fixed rate early?

Some lenders will allow you to seek a product transfer before the end of your fixed rate, but this
would usually be just before the fixed-rate ends and you would still be with the same lender, just a
different mortgage product. Otherwise, changing mortgage product will usually see you pay an early
repayment fee.

Can I leave my fixed rate mortgage early for a cheaper one?

Your fixed-rate mortgage may not be the best deal you can get, and sometimes the cost of an early repayment charge will be cheaper than continuing with your current mortgage product if there’s a better one you could be eligible for, either with your current lender or a different one. It’s often worth seeking specialist advice before committing to a mortgage or finding a new product. Our team at Clever Mortgages are happy to help.

Can I leave my fixed rate mortgage early to remortgage and raise money?

You can leave your fixed rate mortgage early to remortgage, but again you’ll still need to pay the early repayment charge.

If you’ve got a large amount of equity in your home or have seen a rise in your property’s value and want to remortgage to raise money, then it’s likely you can remortgage and afford to pay the early repayment fee. If you’re remortgaging to raise money but have very little equity in your home, this could prevent a remortgage being financially viable due to the additional cost of the early repayment- however this all depends on each individual financial situation, which is why specialist advice is so helpful when deciding what to do with your mortgage.

Can I raise money without leaving my current mortgage?

Yes, assuming you are pass affordability criteria, you could apply for a second-charge mortgage. This
would allow you to borrow money while leaving your current mortgage intact and avoiding an early
repayment charge by borrowing money against your home in the form of another mortgage. You’d
need to have sufficient equity built up in your property to do so, but if you’d like to inquire about a second charge mortgage, request a call from one of our expert advisors.

How do I leave my fixed rate mortgage early?

To leave your current fixed rate mortgage early it’ll need to be paid in full- including any early repayment and exit charges. You can do this by transferring to another product, remortgaging with a
new lender or if you’ve had a windfall of cash, paying the mortgage off.

If you’re looking for advice, or help finding your perfect mortgage- get in touch! Our expert brokers come with a wealth of experience and work with over 100 lenders who consider all applications,
even with a bad credit history.