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Check what interest rate you are paying, and whether you are part of any special offer such as a fixed, discounted or capped rate deal, for example. Ask your lender if you will face any penalty if you pay the loan off early by remortgaging. So-called ‘early redemption charges’ normally only apply if you want to leave a deal such as a fix or discount before the special offer term expires, though some lenders also charge them for a few years after a special offer has expired as well. If you don’t face any early redemption penalties then you are free to look around for a better mortgage offer straight away and are far more likely to save a lot of money in the process.

If you do face redemption penalties then you have two choices. First, you can wait until the penalty period ends and start shopping around for a good remortgage then. Or you can work out if the savings you could make through remortgaging are so great that the penalties are actually worth paying. Let’s say you took out a five year fixed rate mortgage set at 6.5 per cent three years ago. If your loan is worth £140,000 then your current monthly interest payments will be £758. If you remortgage elsewhere before the end of the five year fix your lender may charge an early redemption penalty worth, say, three months interest or £2,274. That’s a tough penalty. But if you remortgaged on to a bargain basement rate of 4 per cent, for example, you would bring your monthly payments down to £467 and save a total of £6,984 over what would have been the final two years of your fixed rate deal.

It means the £2,274 penalty would almost certainly have been worth paying, even when any other costs of the remortgage are taken into account. Working out if redemption penalties can be recouped by remortgaging is difficult, so it can be worth speaking to an independent broker for advice. The important thing is to find out if you face any penalties at all, and then what they might be, before deciding whether or not to change your existing arrangement.