Fixed rate ending, no problem!

Every few years that letter lands. Your fixed rate is coming to an end, here's what happens next, and here's what your new payment will be if you do nothing. And a lot of people do exactly that, nothing. Not because they don't care, but because life is busy, remortgaging sounds like a faff, and the letter doesn't look urgent until it suddenly is. The good news is that remortgaging is usually a lot easier than buying, and if you start early, it's one of the simplest ways you could save yourself money.

Don't drift onto the standard variable rate

When your deal ends, most lenders move you onto their standard variable rate, or SVR. This is the rate nobody chooses. It's almost always higher than what you could get by switching, sometimes a lot higher, and it can change whenever your lender decides to change it.

They end up on it because they leave things too late. Your deal ends, you haven't sorted anything, and suddenly you're paying more every month while you catch up. Even a month or two on the SVR can cost you more than you'd think.

Start earlier than you think

Most lenders will let you lock in a new rate around six months before your current deal ends. So if your fix finishes in June, you should be having the conversation around Christmas.

Why so early? Because once a rate is secured, it's there for you. If rates go up in the meantime, you're protected. If they come down, in a lot of cases your adviser can switch you onto the lower one before it completes. You get the best of both, but only if you start early enough to have that option.

One thing to check before you do anything, early repayment charges. If you leave your current deal before it ends you could be paying a penalty, sometimes a big one. Your mortgage statement or your lender's app will tell you when your deal ends and whether there's a charge, so dig it out.

Stay or switch?

Okay so you've got two routes. You can stay with your current lender and pick a new deal, called a product transfer, or you can move to a completely different lender, which is a remortgage.

A product transfer is quick and simple. If you're not borrowing any more money, there's usually no affordability check, no valuation and no legal work. For a lot of people it's the most suitable answer. But it's not always the best for your circumstances, and your current lender might not tell you if someone else is cheaper.

A remortgage takes a bit longer and involves a new application, a valuation and a solicitor, although a lot of lenders offer free legal work to tempt you across. It's worth doing if the rate is better, if your circumstances have changed, or if you need to borrow more.

The point is, don't assume. Look at both, compare them properly, then decide.

What's changed since last time?

Think back to when you took out your current mortgage. How much was the house worth? How much did you owe? If you've been paying it down for a few years and house prices in your area have gone up, you might have a lot more equity than you realise. That can put you into a lower loan to value band, and lower bands usually mean better rates.

Now think about everything else. Had a pay rise? Changed jobs? Gone self employed? Had a baby? Had a rough patch with your credit? Some of these help, some of them make things trickier, but all of them matter. It's much easier to plan around them when your adviser knows upfront than finding out halfway through an application.

And if you're moving lenders, the prep from my buying post still applies. ID, proof of address, payslips or your SA302s and tax year overviews, up to date statements for anything you owe, and a quick look at your credit file. Have it ready and your application can go in the same day.

Borrowing more?

Remortgaging is often when people look at releasing some money, maybe for an extension, a new kitchen, or to help one of the kids with a deposit.

Some people also look at pulling their debts into the mortgage. It can bring your monthly outgoings down, but be careful. You're taking something like a car loan you'd have cleared in three years and stretching it over twenty or thirty, so you'll often pay a lot more in total, and that debt is now secured on your home. Sometimes it's the right move, sometimes it really isn't, so talk it through properly before you decide.

So, is remortgaging easy?

For most people, yes. It's usually quicker than buying, there's no chain, no estate agent and no seller getting cold feet. The only real way to get it wrong is to leave it too late or just sign whatever your current lender sends you without looking anywhere else.

If your deal is ending in the next six months, or you're not even sure when it ends, let me know. I'll review what your current lender is offering, discuss the alternative options available to you, and help you through the process.