Your Mortgage Deal Is Ending: What Should You Do Next?
If your current mortgage deal is coming to an end, the obvious question is usually: what should you do next?
It can sound like it should simply be a case of choosing another rate, but there is often more to consider.
The short answer is to start reviewing your mortgage around six months before the deal expires. Your main options will usually be a product transfer with your existing lender or remortgaging to a new one, but the conversation should also cover your mortgage balance, property value and future plans.
When should you start reviewing your mortgage?
When a fixed, tracker or discounted mortgage deal ends, the mortgage will usually move onto the lender’s Standard Variable Rate unless another product has been arranged.
That is why it makes sense to start reviewing your options around six months beforehand.
Mortgage Wallet helps make this easier for Healthy Financial Services clients by keeping track of key information, including the mortgage balance and the date the current deal is due to end.
Clients can then book their review with HFS around six months before the expiry date, rather than having to remember it themselves or leaving everything until the last minute.
Starting early does not mean making an immediate decision. It gives you time to understand what your existing lender may offer, compare it with the wider mortgage market and decide what will suit you next.
Product transfer or remortgage?
A product transfer means choosing a new mortgage deal with your existing lender.
Remortgaging means replacing your current mortgage with a new one from a different lender.
A product transfer can often be straightforward because you are not moving the mortgage elsewhere and, depending on the lender and what you want to change, it may involve less paperwork.
But straightforward does not automatically mean better.
Another lender may offer a more suitable rate, lower overall cost or greater flexibility. Equally, once fees and other costs are considered, remaining with your current lender may still provide the better outcome.
The aim is not to switch lenders simply for the sake of it. It is to compare both options and understand which one is likely to work better for you.
Your mortgage needs may have changed
A lot can change during a two-year or five-year mortgage deal.
Your income may have increased or decreased. You might have changed jobs, become self-employed, taken on new commitments or paid off existing debts.
The property may also be worth more or less than when you arranged the mortgage.
This can affect your Loan to Value, usually referred to as LTV. If the mortgage balance has reduced and the property value has increased, you may now fall into a lower LTV bracket and have access to different mortgage products.
Your future plans matter too. You might want to:
Borrow additional money for home improvements
Make a lump-sum payment or increase your overpayments
Reduce or extend the remaining mortgage term
Move home within the next few years
These should all form part of the review before you select another deal.
For example, fixing the mortgage for longer may provide useful certainty, but it could be less suitable if you expect to move or make significant changes during that period.
Find the right deal, not just the lowest rate
The headline mortgage rate is important, but it does not tell you everything.
Mortgage products can include arrangement fees, valuation costs, legal costs, cashback and different early repayment charges. A slightly lower rate with a large product fee may not provide better value than a fee-free option, particularly on a smaller mortgage balance.
You will also need to consider the type and length of the new deal.
A fixed rate offers greater certainty over your payments, while tracker and other variable rates can move up or down. A two-year fixed rate gives you an earlier opportunity to review the mortgage again, while a five-year deal can provide longer-term certainty.
Neither is automatically better. The right choice depends on your plans, priorities and attitude towards future rate changes.
Starting early means there is time to secure a suitable option before the current deal expires. The available rates can then continue to be monitored in case something more suitable becomes available before the new deal begins.
Review the whole mortgage, not just the rate
When I review a mortgage with a client, I do not simply replace their current rate with another one.
I want to understand what they owe, what the property may now be worth, what monthly payment feels comfortable and whether they plan to move, borrow more or make overpayments during the next deal.
Those conversations help determine whether a product transfer or remortgage is more appropriate and what type of new deal is likely to fit properly.
At Healthy Financial Services, I help clients compare the options available from their existing lender with the wider mortgage market, while considering their current circumstances and future plans.
If your mortgage deal is due to end within the next six months and you are based in Reading, Berkshire, Oxfordshire, Buckinghamshire or further afield, feel free to book an initial conversation through Mortgage Wallet or contact Healthy Financial Services directly.
This article is for general information only and does not constitute personalised mortgage advice.
Your home may be repossessed if you do not keep up repayments on your mortgage.
