What happens when your current fixed-term mortgage comes to an end?
If your current fixed-term mortgage deal is set to end in a matter of months, it’s time to start thinking about your options. Otherwise, you may find that you see a significant increase in your monthly mortgage repayments.
What happens when my fixed-rate deal expires?
When your existing mortgage deal comes to an end, you will stop paying a fixed mortgage rate and your lender will move you on to their standard variable rate (SVR). While simply allowing your mortgage to move over to your lender’s SVR might sound like an easier option, it’s worth remembering that interest rates for SVRs tend to be higher than other mortgage services.
For most borrowers, remortgaging to a new fixed-term agreement is the best way to keep their monthly repayments affordable and lower the overall cost of their mortgage.
The important thing is not to panic and take a little time to shop around to find the best deal for your circumstances. A mortgage broker can compare hundreds of mortgage products and recommend the best way to keep your monthly repayments affordable.
What are Standard Variable Rate Mortgages – And Are They A Good Deal?
Standard variable rate mortgages are set by mortgage lenders and can rise and fall at any time – which means that your mortgage repayments may rise and fall at any time too.
Interest rates for SVR mortgages aren’t directly tied to the Bank of England base rate, although they are influenced by the cost of borrowing for banks. For example, if the base rate were to rise a lender may decide to match or even exceed the percentage change.
It is also worth remembering that if the cost of borrowing for banks were to fall, lenders may simply decide to keep their SVR where it is. There is no guarantee of when or even if your monthly mortgage payment will decrease.
This doesn’t mean that SVRs are always a bad thing, in fact for the right homeowners they can be the best option. For example, with standard variable rate mortgages, there are usually no early repayment charges.
If you are looking to pay off your mortgage quickly with savings, inheritance, or an increase in wages, not having to pay expensive overpayment fees can be a real money saver.
Also, if you have a relatively small amount left to pay on your mortgage, some lenders may not be willing to allow you to remortgage, so you’ll pay off the remainder of the mortgage at the standard variable rate.
However, for the majority of homeowners, SVRs are an expensive option with the added drawback of making it harder to budget for monthly outgoings.
Should I choose a fixed-term mortgage?
If you want to keep your monthly remortgage repayments consistent and affordable, remortgaging at the end of your existing mortgage term is likely the best solution.
There are several types of mortgage products available, but a fixed-term mortgage is currently the most popular among homeowners. This is because fixed-rate mortgages are generally less complicated than other mortgage types and offer the security of knowing what to expect from month to month.
When Can I Remortgage?
It makes sense to arrange your new mortgage deal before your existing agreement ends. You can typically secure your remortgage deal three to six months before your current mortgage agreement is due to end.
In most cases, once you have found a new mortgage, you won’t be bound to the new agreement until your current mortgage ends and your new arrangement begins.
This means that until your new mortgage comes into effect, you are free to shop around for a better deal.
Secure Your Fixed-Term Mortgage Now!
If your fixed-term mortgage is due to end soon, now is the time to begin looking for the best deal. Taking a proactive approach now is the best way to make sure you save money in the future.
To help get you started, our mortgage calculator can show you what rates could be available to you, while the Edward Mellor team is on hand to guide you through your mortgage journey.
Contact us today to arrange a mortgage appointment or call us on 0161 443 4830 – we’d love to hear from you.
Your home may be repossessed if you do not keep up repayments on your mortgage.