Is your current mortgage deal coming to an end? If so, it’s time to consider what you want to do next. There are different options available to you, from doing nothing at all and staying with your current lender, to switching your mortgage to a new lender.
Here’s why it can pay to take expert advice if your deal is coming to an end.
Paying standard variable rate could see your payments rise significantly
When your fixed-, tracker- or discounted-rate mortgage deal comes to an end, your lender will usually move you onto their standard variable rate (SVR). In this scenario, there are three important points to be aware of:
- SVRs tend to be higher than the rate you may have been paying before. For example, in April 2020, Unbiased reported that the average mortgage fixed rate was 1.5%, whereas the average SVR was 3.5% or higher.
- A lender’s SVR will almost certainly be higher than other deals that are available across the market, either with your current lender or with another bank or building society.
- As the name suggests, SVRs are variable, meaning the lender can change the rate at any time. They might do this in response to changes in the Bank of England base rate, but in theory they can change it whenever they want, by however much they want, for any reason.
Leaving your mortgage to revert to your lender’s SVR is likely to see your repayments rise. That’s why it makes sense to consider alternative options.
Taking a new deal with your current lender
Before your lender moves you to the SVR, they will often contact you and offer you a new fixed, tracker or discounted rate. This may sound like a positive thing, as it will typically save you money when compared to reverting to the SVR.
However, even if your lender is offering you an attractive deal, it may still not be as good as other products available in the market.
Take renewing your car insurance, for example. The renewal quote might save you a few pounds, but by switching to another insurer you can often save significantly more.
Shopping around for a better deal
The mortgage market is highly competitive, so you will often find that there’s an attractive mortgage deal available with another lender.
Many lenders pay the costs associated with switching your mortgage, and so remortgaging to another bank or building society can often be the best way of securing the most appropriate rate for you.
Even if it turns out that your current lender can offer you a competitive product, it’s always worth doing your research and making sure you aren’t missing out on an even better deal.
A mortgage broker has access to a wide range of deals from throughout the market, many of which may not be available to you directly. So, if your deal is coming to an end, it always pays to have a chat with an expert as they can work out which deal is likely to be the right one for you.
Get in touch
If you’re not sure which option is best for you, we can help you figure out what the best deal might be in your situation. We’ll be able to recommend the right fixed-, tracker-, or variable-rate product and work out which option is the most cost-effective.
If you’d like to discuss your options, please email [email protected] or call 0131 339 2281.
Your home may be repossessed if you do not keep up repayments on a mortgage or other loans secured on it.