What Happens When My Fixed Rate Mortgage Ends

What Happens When My Fixed Rate Mortgage Ends

This page was last updated on 1 May 2022

What Happens When My Fixed Rate Mortgage Ends In 2022

A mortgage is a type of loan that is used to purchase a home. The loan is secured on the home itself, meaning that if the borrower fails to make payments on the loan, the lender can seize the property to repay the loan.

Mortgages are typically offered at a fixed interest rate for a limited period of time, which means that the borrower’s monthly payments will stay the same for the duration of the fixed rate period. All fixed rate deals come to an end and when this happens, the borrower may choose to remain on the mortgage at the current variable interest rate, or they may opt for a new mortgage with a different interest rate.

What is a fixed rate mortgage?

When you take out a fixed rate mortgage, your repayments will be the same amount each month for a fixed period of time. The length of this period is usually between two and five years and the amount of your repayment will never change during this time. The rates of interest that you pay on your home loan will not change during the fixed term of your mortgage.

A fixed rate mortgage is a type of home loan that is available from most high street lenders. You may be able to find it on some comparison websites, or you could contact your bank or building society directly.

Fixed rate mortgage benefits

  • A fixed mortgage rate protects you from future interest rate rises.
  • It will give you peace of mind with a fixed monthly repayment and allow you to plan your finances accordingly.
  • Fixed rates can be a good way to protect yourself against volatility in the economic climate.

Fixed rate mortgage drawbacks

  • If interests rates go down during your fixed term, you will not get the benefit of any reduction until your fixed rate ends.
  • If you wish to change from a fixed rate mortgage because interest rates have gone down, you may be subject to penalties. 

Topics that you will find covered on this page

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What is the difference between fixed rate mortgages and tracker rate mortgages?

The key difference between fixed rate and tracker rate mortgages is that with a fixed rate mortgage, your repayments will be the same amount each month for the agreed period of time. With tracker mortgages, the interest rate you pay on your home loan can go up or down in line with the Bank of England Base Rate.

A tracker rate mortgage may be a better deal for you if you think that interest rates are likely to drop during the term of your mortgage. However, if interest rates rise, your monthly payments will also rise. With fixed rate mortgages, you’ll know exactly how much you need to budget for each month, regardless of what happens to interest rates.

What happens when my fixed rate mortgage ends?

Your fixed mortgage rate will come to an end when the fixed rate period has finished. This means that you will need to start repaying your loan using the lenders standard variable rate, which could be a lot more expensive than your fixed rate.

If you don’t want to switch to the lender’s standard variable rate, you’ll need to remortgage onto a new home loan with a new fixed rate term. You may be able to take out a new mortgage deal with your existing lender but you are likely to be charged arrangement and legal fees. 

What are my options when my fixed-rate mortgage ends?

You have a few options when your fixed rate ends, and the one you choose will depend on your personal circumstances. Mortgage brokers will be able to help you with mortgage advice but listed below are a few options worth considering when you find yourself in this situation.

Stay with the current lender on their SVR

If you wish to remain with your current lender when your fixed term ends, you will need to move onto their standard variable rate (SVR). This means that your repayments will fluctuate in line with any future movements in market interest rates.

You will be offered this by default when most fixed rate deals expire, but if your lender’s rates are higher than other deals on offer in the market it may be worth shopping around for a better deal with another lender instead of automatically continuing with your lender.

Consumers who want to continue saving on their monthly repayment should fix for an agreed period of time and then check what type of terms are available on the lender’s SVR.

Remortgage onto another fixed rate mortgage

If you want to keep paying the same amount every month, you may be able to find another deal with a fixed rate.

This means that when your fixed rate comes to an end, you’ll have the option of either negotiating a new fixed deal with your existing lender or remortgaging with a different lender. If interest rates fall, however, you will benefit by remaining on the standard variable rate. 

Be aware that if your financial situation has changed (this can often happen when people are self employed), a mortgage provider will perform a credit check on you when you remortgage. If you have bad credit and fail the affordability assessment, you may be refused a new deal. 

Switch to a tracker rate mortgage

Tracker rate deals are only available for specific periods of time, usually lasting between 6 months and five years. After your deal ends, there is no protection against interest rate rises.

Remortgage with a new lender

If you are not comfortable with moving to your lender’s SVR or you would like to choose a different deal, there are many other options available to you when your fixed term ends.

Shopping around for a different lender could save you money by obtaining a good interest rate on offer at that time.

You could ask friends and family for their opinion on banks they use or check out some of the comparison websites on the internet that allow you to compare mortgages online.

Remortgage at a lower rate or into another product

If interest rates have fallen compared to what you originally paid, it may be possible to get more competitive rates with another lender and benefit from any fall in rates.

If you repay your mortgage before the end of the mortgage term you are likely to face repayment fees.

Also bear in mind that switching mortgage deals can result in an arrangement fee and a booking fee for the new mortgage.  A mortgage broker will be able to advise you on the potential costs.

Consider buying a new property

As prices are currently rising year-on-year, and your housing needs may have changed, borrowers should also consider whether buying a new property is an option worth exploring, as this will give them more flexibility in terms of choosing their type of home loan.

Buying a new home usually means that you will not be tied down to the lender of your previous property, therefore it could save you money in the long run.

In this case, you will sell your property and pay off your existing mortgage before taking out a new mortgage. Talk to an expert mortgage broker before deciding to take this course of action as you should be aware that there are significant legal costs and stamp duty costs.

Can you remortgage early?

Yes, it is possible to remortgage early if you find a new deal that offers a lower interest rate than your current mortgage. This could save you money in the long run, and it can sometimes give you more flexibility if your personal circumstances have changed, perhaps by spreading payments over a longer period of time.

Do mortgage payments go down when you renew?

It depends on the terms of your mortgage renewal whether your repayments will go up or down when you renew with a new fixed rate. If interest rates fall substantially below what you are paying at the end of your current fixed term, you may get a new mortgage at the lower interest rate and start again on a new, cheaper deal.  On the other hand, rates may go up but a new fixed term mortgage may still give you the certainty you need to manage your finances.

mortgage renewal

What happens if I stay on an SVR mortgage?

When the fixed rate ends, you will either have to remortgage to another deal or move to paying the lender’s standard variable rate (SVR).

An SVR fluctuates with changes in central bank interest rates.  It is usually set at a rate higher than a lenders fixed rate, so borrowers could save money by refinancing beforehand.

If interest rates rise, your repayments on an SVR could increase very quickly and these could remain high for a number of years if there are no more rate cuts.

Can I renegotiate after my fixed rate period ends?

You may be able to renegotiate your old mortgage if your lender allows it. Some lenders will allow you to fix again after the end of a previous fixed-rate deal.

A mortgage is a type of loan that is used to purchase a home.

Your lender will be able to advise whether you can remortgage rather than move to an SVR when your current deal comes to an end. Some lenders will allow you to fix again after the end of a previous fixed-rate deal, potentially even at a lower interest rate than your original agreement.

Can I overpay my monthly mortgage payments after my fixed term ends?

Yes, you can choose to pay off your mortgage faster or even choose to pay off the entire mortgage. On an SVR, many lenders have no issue with you overpaying your mortgage payments however, sometimes there may be additional costs such as an early repayment fee. 

You may be allowed to make mortgage overpayments on a month-by-month basis or in large chunks without early repayment charges.

When your fixed rate period ends, you will become subject to mortgage repayment amounts that fluctuate with the economic climate.  This can cause financial hardship.  If you have the ability to repay earlier you can reduce the risk of this.  You can choose to carry on making regular payments or pay off larger sums periodically if you would like to own your home sooner rather than later.

renew mortgage

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Can you save money at the end of your fixed rate term?

You can potentially save money by changing to a new fixed-rate mortgage deal with a lower interest rate.

There are often deals on the market so it is best to shop around and speak to mortgage brokers. Changing to a new fixed-rate mortgage deal shortly before the end of your previous one can be advantageous, as it may save you money in the long run.

The initial SVR at the time you took out your fixed rate loan may have been low, but there is no telling whether this will last, so remortgaging could work out cheaper for you. It’s important that you do not just assume that rates will go down after your current fixed rate term ends, as they could rise instead.

If you stretch yourself financially on a fixed rate mortgage you can be at risk of financial hardship, including inability to pay your other debts and even foreclosure by your mortgagee if you are not able to meet the cost of rising variable interest rates in the future.  

You should also remember that lenders set their standard variable rates according to economic conditions and borrowing costs at that time.

Tips for switching your mortgage deal

Two of the most common ways to switch mortgages when your current account comes to an end are remortgaging with your existing lender or switching to a new lender.

When you move house, it’s not always necessary to take out a brand new deal to pay for your home. You can sometimes carry over your previous loan which is known as an ‘assumption’.

However, bear in mind that savings made through an assumption are likely to be minuscule compared with switching deals completely, unless you have a particularly good deal. You could get stuck with higher monthly payments if you do not understand how interest rates work so it is best to speak to a mortgage advisor who can help you get to grips with the complexity of the whole mortgage situation. 

However, there is no guarantee that your lender will agree to an assumption. You’ll need to ensure that you discuss with your current mortgage provider any proposed new purchases and remortgage before proceeding.

How do I find the best fixed rate mortgage?

It’s worth shopping around to compare what you currently pay on your home loan to ensure that you are getting the best deal for yourself.

Even if you find a better fixed rate mortgage deal, remember that additional fees or early repayment charges may apply if you leave your mortgage deal before it comes to an end.

Most lenders should contact you before your fixed rate mortgage ends to inform you of any offers they might have which will entice you to remain with them.  If not then switching providers may save you money in the long run.

It is advisable to seek advice from a mortgage broker or a financial adviser to find the best deal for your situation.

Over 55 and a home owner? Try our equity release calculator and see how much money you can get from your house, tax-free, in 30 seconds

Learn More About Mortgages In The UK

How do mortgages work in the UK?

Buying a home or land is expensive. A mortgage is a financial product that helps people purchase their own home or land.This is especially true for a first time buyer, as it might be the only route onto the property ladder.

The minimum credit score for a mortgage

ou can still be approved for a mortgage to buy a property if you have a poor credit score. However, someone with a poor credit score will probably have a higher interest rate than someone whose credit score is good. Buyers with a low credit score may also need to pay a bigger deposit.

fixed term Contract Mortgages

A fixed term contract is a way of describing certain types of employment. If your current employment contract is due to end after a certain period of time, or after a specific piece of work is complete, you are likely on a fixed term contract. 

how long does a mortgage application take?

After sending off the final application waiting for the decision can be frustrating. Many prospective homeowners ask ‘how long does it take?’ but the truth is the mortgage approval process is always different for each customer.

how long does conveyancing take?

The entire conveyancing process will normally take anywhere between 8-12 weeks, however you should be prepared for this to take much longer depending on your circumstances and wider factors. This articles explores what the timescale involves.

Mortgages if You are bankrupt

There is no hard and fast rule when it comes to what lenders will accept your mortgage application if you want to get a mortgage after bankruptcy. They will lend to discharged bankrupts and consider each case individually. 

what stops you getting a mortgage?

Everyone wants to get the best deal when it comes to buying a home and getting a mortgage when they buy a home. However, being too ambitious can lead to your application being rejected. 

how much do mortgage advisors charge?

Fees for mortgage brokers can be off-putting. A mortgage is an expensive financial product, and often buyers want to save as much money as possible. This might limit their options when it comes to using a mortgage broker.  However, not everyone advisor charges a fee.

IVA Mortgage

When you have an IVA, mortgage acceptance is still possible. However, involuntary agreement mortgage lenders can be hard to find. Typically, a high street company will be more less keen to give you a mortgage. 

Article author

James Lloyd

I am the primary writer and author for Help and Advice, having originally helped start the site because I recognised that there was a need for easy to read, free and comprehensive information on the web. I have been able to use my background in finance to produce a number of articles for the site, as well as develop the financial fitness assessment tool. This is a tool that provides you with practical advice on improving your personal financial health.

Outside of work I am a keen rugby player and used to play up to a semi-professional level before the years of injury finally took their toll.  Now you are more likely to see me in the clubhouse enjoying the game.

Email – james@helpandadvice.co.uk

Linked in – Connect with me 

Frequently Asked Questions

What is a fixed rate mortgage?

When you take out a fixed rate mortgage, your repayments will be the same amount each month for a fixed period of time.

What happens when my fixed rate mortgage ends?

Your fixed mortgage rate will come to an end when the fixed rate period has finished. This means that you will need to start repaying your loan using the lenders standard variable rate, which could be a lot more expensive than your fixed rate.

What are my options when my fixed-rate mortgage ends?

You have a few options when your fixed rate ends, and the one you choose will depend on your personal circumstances.

Can you remortgage early?

Yes, it is possible to remortgage early if you find a new deal that offers a lower interest rate than your current mortgage.

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