Fixed Rate Ending? Here's What to Do

What Happens When Your Fixed Rate Ends

When your fixed rate deal reaches its end date, your lender will automatically move you onto their standard variable rate (SVR). This is the default rate that applies to borrowers who are not on a specific deal. You will receive a letter from your lender, usually a few months before the expiry date, confirming the change and telling you what the new rate will be.

The SVR is set by your lender and can change at any time, usually in response to movements in the Bank of England base rate. Crucially, the SVR is almost always significantly higher than the fixed rate you were paying — often by two to four percentage points. This means your monthly payments could increase substantially, potentially by several hundred pounds.

There is no obligation to stay on the SVR. You are free to remortgage to a new deal with your existing lender or a different one at any time, without paying any early repayment charges. The SVR is essentially a holding rate, and most financial experts recommend moving off it as quickly as possible.

Your Three Main Options

Option 1: Remortgage with a new lender. This involves applying for a mortgage with a different lender, who will pay off your existing mortgage and set up a new one. This gives you access to the widest range of deals and often the most competitive rates. The process typically takes four to eight weeks and involves a property valuation and legal work, though many lenders cover these costs.

Option 2: Product transfer with your existing lender. Your current lender will usually offer you the option to switch to a new deal without the need for a full remortgage application. This is quicker and simpler, but the rates may not be as competitive as what is available on the open market. It is worth comparing before committing.

Option 3: Stay on the SVR. In rare cases, staying on the SVR might make sense — for example, if you plan to sell your home in the very near future or if you want the flexibility to make unlimited overpayments without penalty. However, for most homeowners, the cost of the SVR makes this the least attractive option.

Comparing Remortgage Deals Effectively

When comparing remortgage deals, do not focus solely on the headline interest rate. The total cost of the deal over its full term is what matters. A mortgage with a slightly higher rate but no arrangement fee could work out cheaper than a lower-rate deal with a fee of 1,000 pounds or more, particularly if your mortgage balance is relatively small.

Consider the type of deal that suits your needs. A fixed rate gives you certainty over your monthly payments for the deal period, which is helpful for budgeting. A tracker rate moves up and down with the Bank of England base rate, which could be beneficial if rates are expected to fall but carries the risk of increases. A discount rate offers a set percentage below your lender's SVR, giving some potential for savings but less certainty.

Also look at what is included in the package. Free valuations, free legal work, and cashback offers can all reduce your overall costs. Some lenders also offer the option to add fees to your mortgage balance rather than paying them upfront, though be aware this means you will pay interest on those fees over the life of your mortgage.

What to Do If Your Fixed Rate Has Already Ended

If your fixed rate has already ended and you are now on the SVR, the most important thing is not to panic — but to act promptly. Every month you spend on the SVR is likely costing you more than necessary. Start comparing remortgage deals immediately, either online or through a mortgage broker.

The good news is that there is no penalty for leaving the SVR. Unlike being within a fixed rate deal, you can remortgage away from the SVR at any time without facing early repayment charges. This means you can move quickly without worrying about additional costs.

If you need a few weeks to arrange your remortgage, consider whether your existing lender offers a product transfer that could be set up quickly. Even a product transfer to a rate lower than the SVR can save you money while you explore whether a full remortgage with a new lender would be even better.