If there’s one thing I wish everybody knew about mortgages, it’s that you won’t make payments at the same rate throughout its entire term!
While your mortgage term could last for up to 40 years, you’ll agree on a fixed rate when you start making payments.
Depending on your lender’s agreement, that rate will typically last for two, three, five, or ten years – after which, it’s likely that you’ll be placed straight onto your lender’s standard variable rate (SVR).
As this process happens automatically, why would you need to do anything at all?
Well, for one thing, SVR is often the most expensive rate available. It will also vary, depending on changes in interest rates… so if they go up, so will your monthly payments.
What Should I Do When My Fixed Mortgage Rate Ends?
As a fee-free mortgage advisor, I usually recommend the following options:
1. Discuss Your Plans And Dreams!
If I know more about what your life is like, and what you’re planning for your future, I’ll have a better understanding of how to help you when your fixed mortgage rate comes to an end.
In some cases, it could be that staying with your lender’s SVR makes sense. For example, if your home is on the market, you may need the flexibility of choosing another lender for your new property.
If you have missed mortgage payments without prior agreement, it may also turn out that staying with your lender’s SVR is the best option for the moment.
2. Switch To A New Rate With Your Current Lender
Reducing your monthly payments could be as simple as carrying out a rate switch with your current lender.
This is a good option if your circumstances have changed since you made your original agreement, for example if you’re in a different job that pays less, or you’ve started a family.
A rate switch is still classed as a re-mortgage, as you are selecting a new mortgage product – it’s just that you’ve chosen to remain with your current lender.
3. Analyse The Whole Mortgage Market
I’m a whole-of-market mortgage advisor, which means I’m not restricted to any one lender.
So, as your rate comes to an end, I’ll be able to analyse the whole of the mortgage market on your behalf, and calculate how much you could potentially save by moving to a new lender.
If your current rate has three months or fewer to run, you could help put your mind at rest by contacting me now. Just let me know the details of your current deal, and I’ll help you discover which option is the right one for you.
(I’ll also keep track of your new rate, and get in touch with you before it finishes – saving you the trouble of marking the calendar!)