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Post updated: August 1st, 2024
4 minute read
With almost 500,000 fixed rate mortgage deals due to end between November and January, homeowners whose deals expire in the next 6 months are being urged to start remortgaging now to avoid the potential risk of costly delays.
Many coming off cheap fixed mortgage deals will already be facing a serious financial shock as they find the best mortgage rates available now are much higher than their current one.
But don’t let these higher rates put you off taking action: with the huge volume of remortgages expected this winter, if you leave it too late to start the remortgage process you may end up rolling onto your lender’s standard variable rate until your new mortgage deal starts. This could cost hundreds of pounds extra each month.
So if you end up on your lender’s SVR while you’re waiting for your new mortgage deal to start, how much will this cost you? This will depend on factors including the size of your mortgage, your lender’s SVR and how long you stay on your lender’s SVR for before your new deal kicks in. But using the example of a mortgage of £200,000 over a 25 year term, your payments could be around:
| Rate | Monthly payment | |
| Example current deal | 2% | £848 |
| Best 2 year fix 75% LTV available | 5.39%* | £1,215 |
| Average SVR in October 2023 | 8.18% ** | £1,568 |
| Worst SVR in October 2023 | 9.73%*** | £1,779 |
In this example, you’ll pay £353 a month more on the average SVR compared to the best 2 year fix (at 75% LTV). Whereas you’ll pay a staggering £564 more each month if you’re on the highest SVR on the market of 9.73%.
If your current mortgage deal expires in the next 6 months, start looking now. That way you can lock in a mortgage rate and keep it under review.
David Hollingworth of award-winning, fee-free brokers L&C explains, ‘A key part is to start in good time (if you haven’t already) so that things are lined up and ready to go so that a nice smooth switch over can be achieved. The mortgage offer is only one element of the process and while that should be achievable in a matter of weeks (it can often be quicker but allow for up to a month), there is also some basic legal work to put the remortgage in place.
‘Having that done in good time should help avoid any last minute panic at just the point when the Christmas holidays are approaching and solicitors and lenders may be harder to get hold of.’
When you’re considering your remortgage options, while the mortgage rate is obviously a key factor, remember to look at the whole picture including fees. But don’t worry, a fee-free mortgage broker will do the calculations for you to find the best mortgage deals available. So why not let them do all the hard work.
Paula Higgins, chief executive of HomeOwners Alliance, says, ‘We have been warning homeowners about the financial cost of rolling onto your lender’s SVR. Households are busy in the run up to Christmas and organising your new mortgage deal can slip to the bottom of the to-do list. But if you don’t act promptly, there’s also a risk you slip onto a sky-high SVR. This could cost you hundreds of pounds more at what is already a very expensive time of year – and that really would be “a nightmare before Christmas” So check your deal and speak to a broker today.
Get fee-free remortgage advice from our partners at L&C. Use the online remortgage finder or speak to an advisor today.
The standard variable rate is the interest rate you’ll be charged after the initial term of your fixed, tracker or discount mortgage ends unless you remortgage onto a new deal. Mortgage lenders set their own standard variable rates and as we explain above, they’re often extremely expensive.
You should find this on paperwork from your mortgage lender but if you can’t find it, contact them and they’ll tell you what the current SVR is. However, you can also find your SVR by using our Mortgage Service powered by L&C – just click the “start online” button and enter details of your current mortgage to find your lender’s SVR and see the best deals available to you today.
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