If you took out a mortgage when buying your home or rental property on a fixed rate interest rate, did you know the fixed rate is likely to end after a few years?
This means that the initial rate secured on the mortgage will expire, and you could end up paying more unless you do something, such as transferring onto an alternative product or remortgage to another lender. In this short guide, we’ll answer what you’re your options are and when you should act.
Your current mortgage is ending
Many homeowners have tracker, discount or fixed rate mortgages that are limited to a certain period, and when that time has elapsed, you’ll generally move to what is known as a standard variable rate-mortgage, very often this is not an attractive interest rate.
Just like your broadband provider writing to tell you when your introductory offer is about to expire and your monthly bills will go up, your lender will usually do the same and tell you you’ll be moved to a variable rate mortgage.
We have the right professional experience, extensive industry knowledge and the ability
to search the whole mortgage market. That means you can be confident that any deal that we recommend to you genuinely suits you and your circumstances, and that the advice you’re
being given has been offered with your best interests in mind.
So, what are your options?
- You could do nothing, and your current lender will change your mortgage onto usually a variable rate mortgage. As previously stated, this in most cases will increase your monthly repayments.
- You could stay with your current lender and chose an alternative mortgage product that they provide. (A Product transfer)
- Thirdly, change to a new mortgage lender that has a mortgage product that suits your needs. (A remortgage)
Why bother, it’s easier to do nothing?
How long ago did you take out your mortgage and how much has changed? Financially, the value of your home may have increased, and you may have reduced the balance of your mortgage. Both affect the percentage being borrowed and in turn can affect the interest rate being charged.
Life is constantly changing hence our needs and desires change, e.g., the arrival of babies or working from home might change your future plans.
Consider your options
Choosing the right option can be daunting, or expensive if the wrong decision is made, particularly if you’re not used to making these types of decisions, so our support can be invaluable in steering you the right way. The variety and range of mortgage products available today is vast. As whole of market mortgage brokers we will compare what is available from your current lender with what could be achieved with a new lender to match your needs.
When should I act?
We would recommend that you start the process 6 months before the current fixed term comes to an end.
If you have any questions or want more details on any step in the remortgage process, speak to us. We’re here to work with you and advise you, so you can make the right financial decisions.