1. Transitioning from a Fixed to a Variable Rate
When a fixed-rate mortgage term concludes, homeowners often shift to a variable or “standard variable rate” (SVR) set by their lender. This rate can fluctuate based on market interest rates, potentially leading to higher monthly payments. Unlike fixed rates, SVRs lack long-term stability, so mortgage payments may vary over time. This shift can feel unpredictable, especially if interest rates rise. Homeowners may find it beneficial to plan ahead and prepare for potential changes to monthly budgets, as the increase can be substantial depending on market conditions.
2. Exploring New Mortgage Options
Many homeowners consider remortgaging as their fixed term nears its end. Remortgaging allows borrowers to negotiate a new fixed rate with either their current lender or a different one, which can help maintain predictable payments. Fixed-rate terms are available for various durations, typically two to five years. Exploring remortgage options can also provide an opportunity to secure better terms, lower interest rates, or even release equity if your home has appreciated in value. It’s wise to start reviewing your options several months before your current term expires to ensure a smooth transition and avoid lapsing into an SVR unexpectedly. What happens fixed rate mortgage ends