For many homeowners, the end of a fixed-rate mortgage deal can creep up quietly. Life gets busy, and before you know it, the fixed period ends. But what actually happens if you do nothing at all when your mortgage deal expires?
The answer may surprise you – and it could potentially cost you money.
Your Mortgage Moves to the Standard Variable Rate
When your fixed mortgage term ends, your lender will usually move you automatically onto their Standard Variable Rate (SVR).
The SVR is the lender’s default interest rate and is typically higher than most fixed or tracker deals available on the market. Because it is variable, the rate can also change at any time depending on the lender’s policies or wider economic conditions.
For many borrowers, this means monthly repayments increase significantly once the fixed rate ends.
Why the Standard Variable Rate Can Be Expensive
While every lender is different, SVRs are often several percentage points higher than competitive mortgage deals.
For example, a borrower paying a fixed rate of around 4% might find their lender’s SVR closer to 7% or even higher, which can lead to a noticeable rise in monthly payments.
The main reasons SVRs tend to be higher include:
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They are designed as a default holding rate, not a competitive product.
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They provide flexibility, allowing borrowers to switch deals without penalties.
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Lenders expect most customers to remortgage or switch products instead.
The Flexibility of Being on SVR
While the higher rate can be a disadvantage, there is one key benefit.
Borrowers on a Standard Variable Rate usually have no early repayment charges, meaning they can switch to a new mortgage deal at any time.
This can be useful if you:
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Are planning to move house soon
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Expect interest rates to change
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Need a short period of flexibility before choosing a new deal
However, staying on the SVR long-term is rarely the most cost-effective option.
When Should You Start Looking for a New Deal?
Most lenders allow you to secure a new mortgage deal three to six months before your current fixed rate ends.
Planning ahead can help you:
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Lock in a competitive interest rate
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Avoid being moved onto the SVR
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Reduce the risk of higher monthly repayments
Mortgage advisers can also review the wider market to find deals that suit your circumstances, which may include better rates than those offered directly by your existing lender.
Should You Always Remortgage?
Not necessarily. In some cases, the best option may be a product transfer with your existing lender rather than switching to a completely new mortgage provider.
A mortgage adviser can help compare:
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Product transfer deals
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Remortgage options
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Fees and overall costs
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Long-term affordability
The goal is to ensure your mortgage continues to work for your financial situation.
Doing nothing when your fixed mortgage rate ends won’t put you in breach of your mortgage agreement, but it will usually move you onto your lender’s Standard Variable Rate, which is often more expensive.
Reviewing your options early can help you avoid higher repayments and secure a deal that suits your future plans.
If your fixed rate is coming to an end soon, speaking to a mortgage adviser can help you understand what options are available and ensure you make an informed decision.
