April 2024
Remortgage After Fixed Term in April 2024
What happens when my fixed term mortgage ends?
If you have a fixed rate mortgage, you may be wondering what will happen when your fixed rate period comes to an end. When your fixed rate mortgage ends, your interest rate will return to the lender’s standard variable rate (SVR), which is generally considerably higher than competing lenders’ rates and the rate of your fixed rate deal.
This can result in larger monthly payments. If you don’t want to pay this much, you’ll need to remortgage to another deal from a mortgage lender when your initial period ends.
Topics that you will find covered on this page
What is a fixed rate mortgage?
Unlike most mortgages, a fixed-rate mortgage is one in which the interest rates stay constant until the fixed rate period ends.
This period might be anything from two to five years, or even longer in some cases. The loan will generally revert to the lender’s standard variable rate (SVR) after the fixed rate ends.
What are my options when my fixed rate mortgage ends?
When your fixed rate mortgage ends, there are a few options for mortgage deals to explore with your mortgage advisor.
1 – Repay in full
If you have the funds, you may simply pay off your mortgage in full, eliminating the need to remortgage.
2 – Extend the term of your mortgage
If you want to maintain your monthly payments, most mortgage lenders will let you extend the fixed rate period of your mortgage. This will reduce your monthly payments, but you’ll pay more overall interest.
3 – Get another fix from your current lender
This is generally only feasible if you still have a positive relationship with your current mortgage provider as it will be at the lender’s discretion. If they’re willing to provide you with new fixed rate deals, it’s worth thinking about because they may give you a lower rate than other lenders.
You should seek mortgage advice from a mortgage advisor to get the best mortgage deal.
4 – Move to a variable rate
If you’re okay with your monthly payments fluctuating, consider taking out a variable rate mortgage. Variable rates are frequently less than fixed rates, so this may result in lower payments for a period of time. They can also go up at any moment, which might result in significantly higher monthly payments.
5 – Look for a different fixed rate deal with a different lender
If you want to stay on a fixed rate but don’t want to stay with the same lender when your fixed rate ends, you’ll need to explore different fixed rate deals. Use a comparison website or mortgage advisor to compare deals from different lenders.
6 – Switch to a tracker or discount loan
The interest rate on these mortgages is linked to the Bank of England base rate. As a result, when the bank rate changes, so does your interest rate. Tracker rates are often closely tracked by the base rate, while discount rates are typically several percentage points lower.
What are the benefits of remortgaging?
There are a few benefits to mortgage renewal, including:
1 – Lower interest rates
If you can find a mortgage with a lower interest rate than your current deal, you could save money on your monthly repayments.
2 – Change the length of your mortgage term
If you want to pay off your mortgage faster, you could switch to a shorter mortgage term. This will mean higher monthly repayments, but you’ll pay less interest overall.
You may be able to remortgage and release some of your equity if you’ve developed equity in your property. This might be used to make house improvements, pay off loans, or for any other purpose.
What are the disadvantages of remortgaging?
There are a few disadvantages to getting a remortgage deal after your fixed rate mortgage deal ends, including:
- Breaking your existing mortgage agreement: If you decide to leave your fixed rate mortgage early, you may be required to pay early termination costs if you have a fixed rate mortgage.
- All the fees associated with remortgaging, including appraisal charges and legal fees. You may be able to include these in your new mortgage, but doing so will raise your outstanding debt.
- Moving house: If you’re planning on moving house in the near future, it may not be worth remortgaging as you’ll only be on your new deal for a short time.
"Unlike most mortgages, a fixed-rate mortgage is one in which the interest rates stay constant until the fixed rate period ends."
Is remortgaging right for me?
Not every mover should consider remortgaging after their fixed rate ends. You must balance the additional costs and benefits before deciding whether to remortgage after a fixed term is the best option for you.
If you’re not sure, get advice from a mortgage advisor who will be able to help you choose the best course of action based on your situation.
What happens if I decide to remortgage?
If you decide to remortgage when your fixed rate term ends, you’ll need to compare deals from different mortgage lenders to your current mortgage deal to find the best rate. Once you’ve found a deal you’re happy with, you’ll need to apply for a mortgage with that lender.
The process of remortgaging is similar to taking out a new mortgage. You’ll need to go through an application process and provide documentation such as proof of income and identity.
Once your application has been approved, you’ll need to pay any fees associated with the mortgage and then sign the mortgage contract. Your new lender will then arrange for the transfer of funds, and your old mortgage will be repaid in full.
What does the remortgage process look like?
If you’re thinking about remortgaging, there are a few things you need to do in order to prepare:
Check your credit score
It’s a good idea to check your credit score before applying for new loans. This will let you know if you’re likely to be accepted for a new contract based on your credit score. With online services, you can often check your credit score for free.
Work out how much you can afford to borrow
Use a mortgage calculator to determine how much you may borrow based on your earnings and expenditures. This will assist you in narrowing down the offers that are relevant to you.
Get quotes from different lenders
After reviewing your credit score and determining how much you can borrow, it’s time to start comparing rates from several lenders. Make sure you consider the interest rate, any fees charged by the lender, and any other costs related to the mortgage (such as valuation fees).
Choose the right deal for you
Once you’ve compared deals from many lenders, it’s time to choose the one that’s right for you. Make sure you take into account not only the interest rate but also the fees charged and any other costs associated with the mortgage.
Apply for your mortgage
Once you’ve found the right deal, it’s time to make an application. You will need to provide information about your income, outgoings and debts, and details of your property.
After you have submitted your application, the lender will conduct a credit check and evaluate it. If you’re accepted, they’ll provide you with a mortgage in principle, which indicates how much they’re willing to lend you based on the information you supplied.
Get a valuation
You’ll need to get a property valuation once you’ve obtained a mortgage in principle. This is to ensure that the value of your home is at least as much as the amount you’re borrowing. The lender will usually arrange and pay for the appraisal.
Complete the paperwork
You’ll have to complete the paperwork and supply any extra details the lender requires after you’ve completed the evaluation. This might include copies of your paystubs, evidence of your financial circumstances, and information on your current mortgage.
Move to your new mortgage
Once you have mortgage approval from your lender or mortgage broker, you will be able to move to your new mortgage deal. This usually involves paying a fee to your current lender to cancel your old loan and any fees charged by your new lender. You will then start making mortgage repayments on your new mortgage.
What are the costs of remortgaging?
Exit fees
If you’re still within your term, you may be charged an exit fee by your current lender. Exit fees cover the cost of them losing you as a customer.
Valuation fees
You may need to pay for a valuation to be carried out on your property. This is to make sure that it’s worth at least the amount you’re borrowing. The lender may arrange and pay for the valuation.
Mortgage arrangement fees
Most lenders will charge a fee for arranging your loan, and this can range from around £100 to over £1,000, depending on the lender and the type of loan you’re taking out.
Appraisal fees
If you’re remortgaging to release equity from your property, the lender may charge an appraisal fee. This is to cover the cost of them sending someone out to assess the value of your property.
Broker fees
A mortgage broker may charge a fee for their services if you hire them to assist you in finding a better deal. The fee can be a percentage of the loan amount or a flat price, usually between £500 – £1,000.
Arrangement Fees
An arrangement fee can range from around £100 to over £1,000, depending on the lender and the type of mortgage you’re taking out.
When is the best time to remortgage?
The best time to remortgage is usually when you’re coming to the end of your fixed rate. This is because you will then have the opportunity to switch to the best deal with a lower interest rate. If you’re on a standard variable rate, you may also be able to find a better deal by remortgaging with a different mortgage provider.
Can I remortgage for more flexibility?
Remortgaging can give you more flexibility. For example, you may be able to switch to a mortgage deal with a different fixed rate period length or repayment option. This could make your mortgage more affordable in the long run.
Should I remortgage before the end of the term?
If you’re thinking of remortgaging before the end of your term, there are a few things to consider.
First, you will need to check if there are any early repayment charges on your current mortgage. Early repayment charges can be costly, so it’s important to factor them into your decision.
You will also need to think about how long you have left to run on your fixed term. If it’s only a few months, it may not be worth switching to a new deal. This is because you may incur costs such as valuation fees and arrangement fees, which could outweigh any savings you make on the new deal.
Finally, you will need to compare the deals on offer from different lenders to see if you can get a better deal by remortgaging. Remember to look at the interest rate, as well as any fees (especially early repayment charges) that may be charged when you’re considering what the best deal might be.
It’s essential to consult an expert or mortgage broker about exit fees and any other debts you have before deciding to abandon your fixed rate early.
Article author
Katy Davies
I am a keen reader and writer and have been helping to write and produce the legal content for the site since the launch. I studied for a law degree at Manchester University and I use that theoretical experience, as well as my practical experience as a solicitor, to help produce legal content which I hope you find helpful.
Outside of work, I love the snow and am a keen snowboarder. Most winters you will see me trying to get away for long weekends to the slopes in Switzerland or France.
Email – [email protected]
Frequently Asked Questions
When is the best time to remortgage?
The best time to remortgage is usually when you’re coming to the end of your fixed rate. This is because you will then have the opportunity to switch to the best deal with a lower interest rate. If you’re on a standard variable rate, you may also be able to find a better deal by remortgaging with a different mortgage provider.
Can I remortgage for more flexibility?
Remortgaging can give you more flexibility. For example, you may be able to switch to a mortgage deal with a different fixed rate period length or repayment option. This could make your mortgage more affordable in the long run.
Check your credit score
It’s a good idea to check your credit score before applying for new loans. This will let you know if you’re likely to be accepted for a new contract based on your credit score. With online services, you can often check your credit score for free.
Work out how much you can afford to borrow
Use a mortgage calculator to determine how much you may borrow based on your earnings and expenditures. This will assist you in narrowing down the offers that are relevant to you.
