Understanding what happens when your fixed rate mortgage ends is crucial for managing your financial future. As the term of your fixed rate mortgage draws to a close, it’s important to know your options and the steps you need to take. At VIBE, we aim to guide you through this transition smoothly, ensuring you make the best decisions for your financial well-being.
Your Mortgage Reverts to the Standard Variable Rate (SVR)
When your fixed rate mortgage ends, your lender typically moves your mortgage to their standard variable rate (SVR). The SVR is usually higher than the fixed rate you were paying and can fluctuate based on the lender’s discretion and broader economic factors. This change means your monthly mortgage payments could increase, and the amount you pay each month might vary. Understanding this transition is vital to avoid any financial surprises.
Explore Your Remortgage Options
As your fixed rate term nears its end, it’s an ideal time to explore remortgage options. Remortgaging involves switching to a new mortgage deal, either with your current lender or a different one. By shopping around and comparing different deals, you can potentially find a more favourable rate than the SVR. Remortgaging can save you money and provide stability, especially if you can secure another fixed rate mortgage.
Consider a New Fixed Rate Mortgage
One popular option when your fixed rate mortgage ends is to secure a new fixed rate mortgage. A new fixed rate mortgage offers the benefit of predictable monthly payments, protecting you from interest rate fluctuations. Fixed rate periods can vary, typically ranging from two to ten years. Choosing a fixed rate period that aligns with your financial goals and plans can provide peace of mind and financial stability.
Evaluate Variable Rate Mortgages
Alternatively, you might consider a variable rate mortgage. Variable rate mortgages can come with lower initial rates compared to fixed rates, but they are subject to change based on the lender’s SVR or other indices. There are different types of variable rate mortgages, such as tracker mortgages that follow the Bank of England’s base rate. While variable rates offer potential savings, they also carry the risk of rising payments if interest rates increase.
Check for Early Repayment Charges
Before making any changes, it’s essential to check if there are any early repayment charges associated with your current mortgage. Some fixed rate mortgages have penalties for repaying or switching before the end of the term. Understanding these charges can help you plan better and avoid unexpected costs. If the charges are significant, it might be worth waiting until the end of the fixed rate period before remortgaging.
Consult with a Mortgage Advisor
Navigating the end of your fixed rate mortgage can be complex, and consulting with a mortgage advisor can provide valuable insights. A mortgage advisor can help you understand your options, compare different mortgage products, and guide you through the application process. At VIBE, our experts are dedicated to providing personalised advice tailored to your unique financial situation, ensuring you make the best choice for your future.
Prepare Your Financial Documents
When considering a new mortgage, whether remortgaging or switching to a new deal, having your financial documents in order is crucial. Lenders will require proof of income, employment details, and credit history. Preparing these documents in advance can streamline the application process and improve your chances of securing a favourable mortgage deal. Keeping your finances organised and maintaining a good credit score will also help in obtaining better terms.
Overview
When your fixed rate mortgage ends, understanding your options and planning ahead can make a significant difference in your financial health. Whether you choose to move to a new fixed rate mortgage, explore variable rates, or consider remortgaging, VIBE is here to support you every step of the way. Trust us to provide expert guidance and personalised solutions, ensuring a smooth transition and helping you secure the best possible mortgage deal.
Further Reading and Resources: Please feel free to check out our Case Studies for intermediaries here and for consumers here.
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VIBE Mortgages Ltd T/A VIBE Mortgages & Protection (Financial Conduct Authority number 966737) is an Appointed Representative of Complete FS Limited which is Authorised and Regulated by the Financial Conduct Authority number 73812. VIBE Finance is a trading name of VIBE Financial Services Limited. VIBE Financial Services Limited is registered in England and Wales No. 10979822. Registered office: VIBE Financial Services Limited, H4 Daedalus Park, Daedalus Drive, Lee on the Solent, PO13 9FX.
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