My fixed-rate mortgage has come to an end – now what?

26/07/2023

The 2023 property market has been an unstable one so far. With the Bank of England’s skyrocketing mortgage lender prices and limited housing options, homeowners on a fixed-rate mortgage may be feeling uneasy about the prospect of changing their current rates.

As of July 2023, the interest rates for a two-year fixed-rate mortgage have inflated to 6.65% and are predicted to steadily increase until the end of the year, leaving many homeowners questioning what to do next when it comes to their mortgages.

Fortunately, there are several options for those in this situation, and this blog will highlight the next steps to navigate this difficult market and make an informed decision.

1. Speak to your lender

As the end of your fixed-rate mortgage term approaches, it’s crucial to communicate with your lender.

Typically a three-month allowance is given to property owners to make a decision on what they want to do with their new mortgages. However, by reaching out early to your lender, you can gather essential information, review the current and predicted market, and discuss the available options.

2. Discern the conditions of your current mortgage

Reviewing the terms and conditions of your current mortgage is an important step in the decision-making process.

Identify the exact date when your fixed rate comes to an end and determine if there are any associated costs, fees, or penalties for leaving the mortgage early, or if an agreement can be arranged if you keep the same mortgage. By understanding these details, you can plan your next steps accordingly and with a better sense of how you will move forward with your home ownership.

3. Shop around for a remortgage

One popular option for homeowners at the end of a fixed-rate term is to completely remortgage their homes.

Remortgaging involves switching to a new mortgage with your existing or a new lender. This change allows you to secure a new fixed-rate term or explore alternative mortgage products that might offer better financial freedom or lower costs compared to the current interest rates. 

Important note: If you’re considering a remortgage, it’s essential to research the market thoroughly and it is widely recommended to leave a six-month window open to investigate the best offers and give time for your mortgage lender to properly review credit and property checks. While it may seem like remortgaging is the best option in the current market, the costs and fees that can come from changing lenders can create a worse situation for your finances if not dealt with in a timely manner.

4. Overpay on your current mortgage 

If you have the financial capacity to do so, overpaying on your current mortgage before it comes to an end can have significant benefits.

By being aware of when your mortgage is coming to an end and withdrawing additional finances to reduce your mortgage balance, you’ll have more equity to release further down the line and, depending on your mortgage agreement, may be able to make lower mortgage payments in the future.

However, as previously discussed, it’s important to check with your current lender if there are any limitations or charges associated with overpaying your mortgage with your current lender.

5. Begin budgeting for new mortgage rates

As your fixed-rate term comes to an end, it’s crucial to prepare for potential changes in your mortgage payments due to the ongoing interest rate hikes. 

If you switch to a new fixed-rate term or chose a standard variable rate, the monthly repayment amount may fluctuate and be higher than what you were previously on, that’s why it’s crucial to begin saving where possible as the end of your mortgage approaches.

6. Speak with a professional mortgage adviser

Navigating the complexities of mortgage options can be challenging in any economy. 

A professional mortgage adviser can provide expert guidance and help you make well-informed decisions so you have peace of mind when you’re reentering the mortgage market.

B-Advised is a financial adviser with over 30 years of experience in property and can provide independent advice to ensure that your mortgage package is the right one for you. They can assess your financial situation and guide you through the entire process. 

Try our free mortgage calculator or get in touch for more expert mortgage advice.