When your fixed rate Mortgage deal ends, you will move onto the lender standard varaible rate(commonly abbreviated to the SVR). At this point you should review your options and decide if you need to do anything, such as take a new fixed rate or other options such as a tracker rate..You should seek professional advice if you are unsure of what is the best option for you….
What Happens When My Fixed Rate Ends.
If you do nothing at all, your Mortgage rate will revert to the lenders standard variable rate. This could mean you pay much each more for your Mortgage, especially of you have just come off a low fixed rate.
Most lenders will give you the option to switch to a new Mortgage deal in advance of your fixed rate ending. Depending on the lender, you can usually switch to a new deal 3 months in advance of current fixed rate ending. Some lenders have recently changed this to anywhere from 4 to 6 months in advance. due to recent interest rate rises.
A good Mortgage Broker can check this for you, as not all lenders offer such advanced options. It is also important to remember that even if you switch to new deal months in advance of old deal ending, it will not normally start until existing fixed rate ends..
Should I Fix My Rate Again When Current Rate Ends?
Whether you fix your Mortgage again will depend on your attitude to risk. If you want absolute certainty of what you will pay over a set period of time, then a fixed rate is likely to be the best option for you.
If you are prepared to take some risk, then a tracker rate might be an option. Tracker rates track the Bank of England base rate, so if the Bank of England base rate rises, your Mortgage rate will rise by the same margin,
For example if the base rate rises from 3%( correct at time of writing this post) to 3.25%, the you tracker Mortgage rate would rise by the same 0.25%
Currently tracker rates are lower in most cases than fixed rates, however they can of course rise as well as fall depending on the Bank of England Policy committee and the decision they make every eight wees or so.
Some lenders also offer lower discounted rates, unlike the Bank of England tracker rates( which track the BOE Base rate) Discount rates are set by each lender. So while they look similar to tracker rates, they are not the same. You are at the behest of the lender, who are free in most instances, to raise their discounted rates at anytime, depending on how the see the market
Should I Just Stay on The Variable Rate When My Fix Ends?
This will depend on your own set of circumstances. If for example you intend to sell up in the near future, then this might be your best option? It means you can sell and not have any early repayment charges( always check with your lender in every case, even if you are on a variable rate)
If you intend to stay in your current property for the next 2 to 5 years or possibly longer, then taking some sort of fixed, tracker or discounted Mortgage rate will normally be cheaper than staying on a variable rate.
Even if you take a fixed, tracer or discounted rate, many lenders will allow you to port your existing Mortgage deal to a new property( subject to each lenders policy at time of application to do this)
Your Mortgage Broker can help and advise you on this and check over the details of any current deal you have, including porting options available
Conclusion.
I hope the above gives you a clearer picture of “what happens when my fixed rate ends” If you need help and advice about your options when your current fixed rate ends, then please feel free to get in touch with me and I will be happy to advise you on your options.
Michael Markey CeMap, CeRER 