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My mortgage is coming to an end: what next?

If you have been a homeowner for a few years and your fixed-rate mortgage is coming to an end, there are a few options you can take to avoid paying more than required. 

If you do have a fixed-rate mortgage, your interest rate is locked in over a certain period of time. Essentially, your interest rate and monthly repayments stay the same for a number of years. However, fixed-rate terms on mortgages do come to an end. When this does happen and you do nothing, you could end up paying substantially more than you did previously. With that in mind, we are sharing your end of mortgage term options to make sure you don’t have to dig deeper for your home. 

When should I apply for a new mortgage?

While applying for a new mortgage can feel like a hassle, it’s more than worth your time. You should think about a brand-new mortgage application - and seeking mortgage broker advice - within two to three months of the end of your mortgage. You should do so early as it can take, at least, a month to get a good offer from a mortgage lender (though it can be quicker). Similarly, if you seek mortgage broker advice, they will communicate with the lender on your behalf, which could add a little time to the process.

As with anything financial, it’s important to do your research. Don’t opt for the first offer - unless it is very generous - and shop around for your end of mortgage term options. If you do seek mortgage broker advice, they will share the deals best suited to your current financial situation and may even offer exclusive deals with certain lenders.

Similarly, if you do choose to go with a new lender, you do not need to tell your existing mortgage lender as the new company will take care of that.

Is it easy to remortgage?  

When you take out a new mortgage, you, generally, get an introductory deal. This deal can last anywhere between two to five years. Once this period is over, you will likely be moved onto the lender’s standard variable rate - typically higher than what you might get elsewhere. Therefore, you may want to consider a remortgage before the end of the fixed term.

If you are not moving home, remortgaging at the end of the fixed term is, usually, straightforward. However, you will need to assess how much is available to borrow, depending on your income, monthly outgoings and equity in your home.

If you do remortgage, don’t, necessarily, go for the cheapest option spread over a longer term. While you will be paying less each month, you will pay substantially more in interest over the years. If possible, attempt to reduce the period of your mortgage.

When considering your end of mortgage term options, you should factor in the cost of remortgaging. Many lenders may charge a booking or processing fee for remortgaging, and mortgages can also come with product fees. If you seek the services of a solicitor, you will have to pay their fees and other admin charges. Before all of this, we suggest seeking mortgage broker advice for the best solutions.

Remortgage valuation tips

Before you do remortgage, you must get your home valued - and this is where our remortgage valuation tips come in. If you choose a new lender, they will require a valuation of the property before they allow you to remortgage. It’s likely you may be expected to pay the fees for a surveyor, although some may offer it free as part of the remortgage deal. However, always check beforehand.

When it comes to remortgage valuation tips, it’s important to be transparent with the surveyor. More often than not, they are not concerned with appearance details but more the structure of the house. However, if you have ripped out the bathroom before they pop round, let them know you plan to upgrade the room.

What are my options?

We have touched on the end of mortgage term options above, but you do have two options: do nothing or compare the deals.

Do nothing 

If you choose to do nothing with the end of your fixed-term mortgage, you do run the risk of paying substantially more. Doing nothing will see you automatically switched to the standard variable rate, or SVR, and this is their default rate. The SVR can vary between lenders and, often, have higher interest rates, so you can incur more costs. Similarly, the SVR doesn’t always follow the base rate and your monthly repayments can go up and down each month.

Look around 

We would suggest looking around for the best mortgage deals. Start doing your research three months before the fixed-rate period expires. There is a good chance your new mortgage will be cheaper than staying at your current one. Getting in early also means that you have allowed enough time for the paperwork to get sorted, so you can switch without paying the SVR.

Get advice 

When it comes to remortgaging, the best thing you can do is seek advice. Whether that means you look into the services of a mortgage broker, or speak directly to your lender - this advice will help you find the most affordable deal for your home.

You can find mortgage brokers across the UK by entering your postcode here. Alternatively, you can read more on what mortgage brokers can offer when looking for a new deal.

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