If your fixed rate mortgage is coming to an end, you might be wondering what happens next and whether you need to do anything.
The short answer is yes, it’s worth reviewing your options before your current rate ends.
If you do nothing, you’ll usually move onto your lender’s Standard Variable Rate (SVR) or another reversion rate. This is often higher than the rate you’ve been paying on your fixed rate mortgage, which could mean an increase in your monthly mortgage payment.
But that’s not your only option.
When should I start looking at my mortgage?
You don’t need to wait until your fixed rate mortgage has actually ended.
In many cases, you can start reviewing your options around four to six months before your current rate expires. Exactly when you can secure a new mortgage product will depend on the lender.
Starting early gives you time to understand what’s available, consider any changes to your circumstances and get something lined up ready for when your existing rate finishes.
And if rates change while you’re waiting? Depending on the lender and product, there may still be opportunities to review what’s available before the new rate starts.
What are my options when my fixed rate mortgage ends?
For most people, there are three main possibilities:
1. Stay with your current lender
Your existing lender may offer you a new mortgage product. This is commonly known as a product transfer or rate switch.
It can be a relatively straightforward option and, if you’re not changing your borrowing, may not require the same affordability assessment as moving to a new lender.
Straightforward doesn’t automatically mean it’s the most suitable option, though.
It’s still worth comparing what your existing lender is offering with the alternatives available to you.
2. Remortgage to a new lender
You could move your mortgage to a different lender if they have an option that’s more suitable for your circumstances.
This is known as a remortgage.
A new lender will usually carry out its own affordability and eligibility checks, so your income, expenditure, credit commitments, property and circumstances can all be relevant.
And it’s important to look beyond the headline interest rate.
Product fees, incentives and the overall cost of the mortgage can all make a difference when comparing your options.
3. Move onto your lender’s Standard Variable Rate
If you don’t arrange a new product when your fixed rate mortgage ends, you’ll usually move automatically onto your lender’s Standard Variable Rate (SVR) or reversion rate.
Unlike a fixed rate, an SVR can change, and it will often be higher than the rate you’ve just come off.
There may be circumstances where remaining on an SVR temporarily is appropriate, but it’s worth understanding the cost and your other options rather than simply allowing it to happen without reviewing your mortgage.
Should I remortgage or stay with my existing lender?
It depends.
A product transfer with your existing lender might be suitable, or moving to another lender could offer a better option.
The answer can depend on things like:
- Your outstanding mortgage balance
- Your property’s current value
- Your income and expenditure
- Changes to your circumstances
- Your credit commitments
- How long you plan to stay in the property
- Product fees and incentives
- Whether you want to change the amount you’re borrowing
- Your plans for the next few years
This is why comparing mortgages isn’t always as simple as looking for the lowest interest rate.
What if my circumstances have changed?
Quite a lot can happen during a two or five-year fixed rate mortgage.
You might have changed jobs, become self-employed, had children, taken on additional borrowing, increased your income or seen the value of your property change.
You may also want something different from your mortgage this time around – perhaps you’d like to borrow more, change the mortgage term or reduce your balance.
A review gives you an opportunity to look at where you are now, rather than simply replacing your old mortgage with something similar.
What if rates change after I’ve secured my next mortgage?
This is another reason we recommend starting the conversation early.
Securing an option doesn’t necessarily mean you should stop paying attention to the market.
If a more suitable option becomes available before your new mortgage starts, it may be possible to review your options again.
At Mortgage Select, this is something we keep an eye on for our clients. We don’t simply arrange the mortgage and forget about it while you’re waiting for the new rate to begin.
Do I need to use a mortgage broker to remortgage?
No – you can approach your existing lender or another lender yourself.
But a mortgage broker can compare your current lender’s options with alternatives and help you understand the overall cost, criteria and practical differences between them.
It can be particularly useful if your circumstances have changed since you last arranged your mortgage.
So, what should I do if my fixed rate mortgage is ending?
Don’t wait for it to expire before thinking about it.
Around six months before your fixed rate mortgage ends is a good time to start reviewing your options, although some lenders may not allow you to secure a new product until closer to four months beforehand.
That doesn’t mean you have to make an immediate decision – it simply gives you more time to understand what’s available and plan ahead.
At Mortgage Select, we’ll look at your current mortgage, your circumstances and what you want from the next few years before recommending the most suitable route for you.
Fixed rate ending soon? Get in touch and we can take a look at your options.
Your home may be repossessed if you do not keep up repayments on your mortgage.
