What happens at the end of a fixed rate mortgage?

A fixed rate mortgage can be an attractive option in that they offer a fixed interest rate for a predetermined period, usually ranging from two to five years. But what happens at the end of this period?

Over the next few years, millions of homeowners could face paying hundreds more each month when their fixed term mortgage deals end.

In this article, we'll explore what you can expect when your fixed rate mortgage term comes to an end and the decisions you'll need to make.

‍1. The end of the fixed rate period

Most fixed rate mortgages will automatically switch to your lender's Standard Variable Rate (SVR) once the fixed period expires. The SVR is typically higher than your fixed rate, which means your monthly payments could increase significantly.

However many homeowners choose to remortgage when their fixed rate term ends. This involves switching to a new mortgage deal, either with your current lender or a different one. This allows you to secure a new fixed rate, potentially at a lower interest rate than your lender's SVR.

‍2. Assessing your options

Before your fixed rate mortgage term ends, it's essential to assess your financial situation and consider your options carefully:

- Evaluate your budget: Review your current financial situation and determine whether you can comfortably afford the higher monthly payments if your mortgage reverts to the SVR. It's crucial to budget for this potential increase and assess its impact on your finances.

-  Explore remortgaging: Consider the advantages of remortgaging. You may find more competitive interest rates, lower monthly payments, or the ability to release equity from your property. We can help you find the best option for your needs.

- Speak to your current lender: Your lender may offer you a new mortgage deal, and you might be eligible for special rates or incentives as an existing customer, ahead of the fixed rate term ending.

3. The remortgaging process

If you decide to remortgage, you can lock in a new fixed rate – either with a current provider or a new one. Here’s an overview of what to do:

• Research mortgage deals: Shop around and compare different mortgage deals offered by various lenders. Look at factors such as interest rates, fees, and terms to find the most suitable option for your circumstances.
• Gather necessary documents: Prepare the required documents, including proof of income, bank statements, and information about your property. This will expedite the application process.
• Seek professional advice: We can provide expert guidance and help you navigate the remortgaging process, helping you find the best deals and ensure you meet all the necessary criteria.
• Submit your application: Once you've selected a mortgage deal, submit your application to the chosen lender. Be prepared for a credit check and a thorough assessment of your financial situation.
• Await approval and completion: After approval, your new mortgage deal will be finalised. This includes signing the relevant documents and arranging for the funds to be transferred to your existing lender to pay off the old mortgage.

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As your fixed rate mortgage term comes to an end, you have important decisions to make regarding your financial future. Whether you choose to stick with your current lender's SVR or explore remortgaging options, careful planning and professional advice are crucial.

Remember that the choices you make can have a significant impact on your monthly expenses and long-term financial stability. So, take your time, evaluate your options, and make informed decisions to secure the best mortgage deal for your unique needs.

How to book a consultation

You can book an online meeting with one of our advisers at your convenience here.

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