Your Fixed-Rate Mortgage is Ending, What are Your Options?

Finding yourself approaching the end of your fixed-rate mortgage term can feel like standing at a crossroads. 

For many homeowners across the UK, especially those who secured attractive rates in recent years, the thought of what comes next can be a bit daunting. 

Will your payments skyrocket? 

What are your options? 

And how can you make sure you’re getting the best deal for your circumstances?

You’re not alone in these thoughts. Thousands of fixed-rate mortgages are expiring, and understanding your next steps is crucial to avoiding unwelcome surprises and potentially saving yourself a substantial amount of money. 

This article, designed for both first-time fixed-term expirers and seasoned homeowners, will walk you through everything you need to know, offering practical advice and UK-specific insights.

What Happens When Your Fixed Rate Ends? The Crucial First Step

Here’s the fundamental truth: your mortgage doesn’t just disappear when your fixed term is over. If you do nothing, your lender will automatically move you onto their Standard Variable Rate (SVR).

Now, here’s the catch: the SVR is almost always significantly higher than the fixed rate you’ve been enjoying. This means your monthly repayments could jump considerably – sometimes by hundreds of pounds. Imagine going from predictable payments to a sudden surge; it can throw your budget into disarray.

Why does this happen? Fixed rates are essentially a special introductory offer. Once that offer expires, you revert to the lender’s default rate. The SVR can also go up or down at any time, influenced by the Bank of England’s base rate but ultimately set by your individual lender. This makes budgeting far more challenging.

In a nutshell, if your fixed rate is ending soon:

• You need to act. Don’t just hope for the best.
• Avoid doing nothing. It’s the most expensive option.
• Expect your repayments to rise if you let it roll onto the SVR.

Is Your Fixed Rate Mortgage Nearing Its End? How to Check

It’s easy to lose track of your mortgage end date amidst life’s hustle and bustle. Here are some tell-tale signs to look out for:

• Letters or Emails from Your Lender: Your mortgage provider is usually quite good at notifying you. Expect communication around six months before your deal expires, detailing your options.
• Memory Check: Do you remember taking out a 2-year or 5-year fixed deal? If you’re approaching that timeframe since you last remortgaged, it’s time to investigate.
• Payment Changes: If you’re suddenly informed of an upcoming change to your monthly payment, or you notice a shift, this could be a clear indicator.

Top Tip: Mark your calendar! As soon as you secure a fixed rate, make a note of its end date about six months in advance. This gives you ample time to plan.

Why Acting Early is Your Best Bet

Procrastination, in this instance, can be very costly. Here’s why taking action before your fixed term mortgage ends is crucial:

• Avoid the SVR Trap: As we’ve established, the SVR is almost always a more expensive way to borrow. By acting, you avoid this automatic, higher rate.
• Maintain Budget Control: A new fixed or competitive variable rate allows you to predict your outgoings, making financial planning much easier.
• Access Better Deals: The mortgage market is competitive. Your current lender might offer decent deals, but other lenders could have even more attractive rates or terms specifically for new customers.
• Save Thousands: Over the lifetime of your mortgage, even a small difference in interest rate can translate into thousands of pounds saved.

Your Options When Your Fixed Rate Ends

When your fixed term is drawing to a close, you have essentially three main paths you can take:

1. Stay with Your Current Lender (Product Transfer)

This is often the simplest and quickest option. Your existing lender will offer you a new range of fixed or variable rate products specifically for existing customers.

Pros:

• Simplicity: Less paperwork and hassle compared to switching lenders.
• Speed: Can be much quicker to arrange.
• No Full Affordability Checks: Often, your lender won’t conduct a full affordability assessment if you’re not borrowing more, assuming you’ve kept up with payments.
• Potential Exclusive Deals: Some lenders offer loyalty rates that aren’t available on the wider market.

Cons:

• May Not Be the Best Rate: While convenient, it might not be the most competitive rate available across the entire market.
• Limited Choice: You’re restricted to your current lender’s product range.

2. Switch to a New Lender (Remortgaging)

This involves taking out a completely new mortgage with a different provider to pay off your old one. It’s akin to applying for a mortgage for the first time.

Pros:

• Access to the Best Rates: You can shop the entire market for the most competitive deals.
• Potential to Borrow More: If you need to raise capital for home improvements, for example, remortgaging can allow you to do so.
• More Flexible Terms: Different lenders offer varying overpayment allowances or other product features that might suit your needs better.
• Lower Loan-to-Value (LTV) Deals: If your property’s value has increased or you’ve paid down a significant portion of your mortgage, you might qualify for better rates based on a lower LTV.

Cons:

• More Complex Process: Involves a full application, credit checks, affordability assessments, and potentially a new valuation and legal work (though many lenders offer free legals for remortgages).
• Potential Costs: While some deals offer free legal work and valuations, you might incur arrangement fees or other costs.
• Time-Consuming: Can take several weeks, or even a few months, to complete.

3. Do Nothing (Automatically Move to SVR)

As mentioned earlier, this means you’ll automatically roll onto your current lender’s Standard Variable Rate.

Pros:

• Maximum Flexibility: SVRs typically have no early repayment charges, so you can switch at any time without penalty. This can be useful if you plan to sell your property very soon or repay a large lump sum.
• No Admin: No forms, no calls, no stress (initially).

Cons:

• Most Expensive: Almost always the most costly option.
• Unpredictable Payments: Your monthly payments can fluctuate, making budgeting difficult.
• Missed Savings: You’ll forgo potential savings from more competitive deals.

Navigating the Process: Your Action Plan

So, you’ve decided to act. Here’s a practical step-by-step guide to securing your next mortgage deal:

 

1. Start Early (6 Months Out) Don’t wait for the last minute. Begin researching your options at least six months before your fixed rate ends. This gives you ample time to compare, apply, and ensure a smooth transition. Many lenders allow you to lock in a new rate up to six months in advance.

 

2. Review Your Current Mortgage Details Before you do anything, get clear on your existing mortgage. Find out:

• Your exact end date.
• Your outstanding balance.
• Your current interest rate.
• Any early repayment charges (ERCs) if you were to switch early (though if you switch after your fixed term, you typically won’t incur these).
• Your property’s current value (a quick online valuation tool can give you a rough idea).

 

3. Assess Your Financial Situation and Goals Your personal circumstances might have changed since you took out your last mortgage. Consider:

• Income Changes: Have you had a pay rise or a pay cut?
• Debt Levels: Have your other debts increased or decreased?
• Life Events: Are you planning to have children, change jobs, or move house in the near future?
• Financial Goals: Do you want lower monthly payments, or are you looking for flexibility to make large overpayments? Are you planning home improvements?

 

4. Check What Your Current Lender is Offering Contact your existing lender to see their product transfer options. They might have special deals for loyal customers. Get their best offer in writing.

 

5. Shop Around the Entire Market Don’t stop at your current lender. This is where you can truly find value.

• Use Comparison Websites: Websites like MoneySuperMarket, Compare the Market, or Uswitch can give you an overview of deals available across different lenders.
• Consider a Mortgage Broker: This is often the most recommended step. An independent mortgage advisor (like those at MortgageLine or Mojo Mortgages mentioned in the articles) has access to a vast array of deals from across the market – many of which aren’t advertised directly to the public. They can assess your individual circumstances, recommend the most suitable options, and often handle the entire application process and paperwork on your behalf. They can save you significant time, stress, and money.

 

6. Prepare Your Documents Regardless of whether you stay or switch, having your documents ready will speed up the process. Typically, you’ll need:

• Recent payslips (usually 3 months)
• Bank statements (3-6 months)
• Proof of ID and address
• Your latest mortgage statement
• Proof of any other income or outgoings

 

7. Budget, Budget, Budget! Once you have an idea of potential new rates and payments, update your household budget. Can you comfortably afford the new repayments? What about a little extra for savings or emergencies? Being realistic now will prevent financial strain later.

Understanding Key Mortgage Terms

Here’s a quick breakdown of some terms you might encounter, explained simply:

Term	Explanation
Standard Variable Rate (SVR)	The default interest rate your lender charges once your introductory deal (like a fixed rate) ends. It’s set by the lender and can change at any time, often influenced by the Bank of England base rate but not directly tied to it. Usually higher than other rates.
Product Transfer	When you switch to a new mortgage deal with your current lender. It’s often simpler than remortgaging as you stay with the same provider.
Remortgaging	When you switch your mortgage from your current lender to a new lender to secure a different deal.
Early Repayment Charge (ERC)	A fee you pay if you repay a significant portion of your mortgage, or switch deals, before your current mortgage term (e.g., your fixed rate period) has ended. Ensure your fixed term is over before switching to avoid this.
Loan-to-Value (LTV)	The ratio of your mortgage amount compared to the value of your property, expressed as a percentage. For example, a £150,000 mortgage on a £200,000 home is 75% LTV. A lower LTV usually means access to better rates.
Mortgage Broker/Advisor	An independent professional who helps you find the most suitable mortgage deal from across the market, based on your financial situation. They can guide you through the process and handle much of the paperwork.

What If You’re Worried About Money or Have Bad Credit?

Life happens, and sometimes financial circumstances change. If you’re concerned about making repayments or your credit score has taken a hit, don’t despair, but act immediately.

• Talk to Your Lender: They are often more willing to help if you engage with them early. Explain your situation and explore options like payment holidays or reduced payments (though be aware of the long-term implications).
• Seek Free Debt Advice: Organisations like StepChange Debt Charity (mentioned in one of the articles) offer free, impartial advice and can help you create a budget and explore solutions.
• Bad Credit Mortgages: While a poorer credit score might mean fewer options or higher interest rates, it doesn’t always mean you can’t get a new mortgage. Some specialist lenders cater to those with a less-than-perfect credit history. A mortgage broker is particularly invaluable in these situations.
• Don’t Stick with SVR for Flexibility: If your financial situation is uncertain, moving to the SVR might seem appealing due to its flexibility. However, cheaper variable-rate options like tracker mortgages (which directly follow the Bank of England base rate) or discount mortgages (which offer a discount off the SVR) could be more cost-effective while still offering flexibility.

Final Thoughts: Take Control of Your Mortgage Journey

The end of your fixed-rate mortgage doesn’t have to be a source of anxiety. Instead, view it as an opportunity to reassess your financial health and secure a deal that best suits your current needs and future aspirations. By starting early, understanding your options, and seeking expert advice, you can navigate this transition smoothly and confidently.

 

Don’t let complacency cost you. Take action today, and ensure your home loan works for you.