Can I change my fixed-rate mortgage?

house and key with Calculator on wooden background

Ask the expert at Smith & Pinching about fixed-rate mortgages - Credit: Getty Images/iStockphoto

I have a fixed-rate mortgage on my house until the end of next year. I think I could borrow more now than when it started as I can afford higher repayments. The house has gone up in value too. Can I change my mortgage now even if it’s still in the fixed-rate period?

Diane Fish, mortgage and equity release adviser with Smith & Pinching

Diane Fish, mortgage and equity release adviser with Smith & Pinching - Credit: Smith & Pinching

Diane Fish of Smith & Pinching responds:

In theory, you are perfectly entitled to change your mortgage at any stage. However, if you are still within the fixed-rate period of your mortgage, your lender will probably impose penalties and/or fees whether you remortgage with them or with someone else.

The charges you might incur could include exit fees from your old mortgage, mortgage arrangement fees associated with your new deal, legal fees and professional fees for carrying out a new valuation of your property. It’s important to weigh up these fees carefully to make sure you are not actually worse off with the new deal. It may well make sense to wait until the end of the fixed-rate period next year before you make any changes.

You don’t mention why you are looking to increase your borrowing. It’s important to bear in mind that if you are looking for funds to cover a credit card debt or other loan, you would be securing unsecured debt against your home.

It’s critical that you compare the interest rates that you are paying now with what is available with a new mortgage deal. It may be that you were lucky enough to secure a good deal with your original mortgage, so don’t throw that away without careful consideration.

It may be possible to extend your existing mortgage without going through the new mortgage process, which might save you some of the fees involved. However, there will still be some charges to be paid. Alternatively, you might be able to consider a second charge mortgage, which would be a separate mortgage contract sitting behind your main account as a second charge loan.

Whatever solution you go for, you will be required to demonstrate that you can afford higher repayments and meet any other mortgage eligibility criteria that the providers may set. I think the best idea would be to talk your options through with an independent mortgage adviser to ensure that any change you make is in your best interests.

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Your home may be repossessed if you do not keep up payments on your mortgage. There will be a fee for the mortgage advice. The precise amount will depend upon your circumstances, and the type of lending taken. Smith & Pinching’s minimum advice fee is £700. Any opinions expressed in this article do not constitute advice.

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