When a fixed-rate mortgage ends, what happens?
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When a fixed-rate mortgage ends, what happens?
What do I do when my fixed-rate mortgage ends?
If you haven’t put a plan in place to take your mortgage forward onto a new rate, you’ll move on to your lender’s standard variable rate. Often that rate’s much higher than fixed or tracker products that could be available.
So, before your fixed rate ends you should ideally get onto a new fixed rate or review the other options.
We contact our clients six months before their fixed rate expires, to ensure there’s something else for them to move on to. There are two routes – and we can advise on both of these. The first is to choose a new rate with the client’s existing mortgage lender on the same basis, with no additional borrowing – that’s referred to as a rate switch or a product transfer.
Or, we can look at the whole mortgage market and prepare a remortgage, which could include capital raising for home improvements or debt consolidation. It may just be to get a better value mortgage elsewhere.
Either way, it’s important to make sure you’re protected against that standard variable rate, as it will cost you a lot more in interest.
Why would someone choose a fixed-rate mortgage?
It’s the most common type of product in the mortgage market – and the one that clients understand the most clearly. Most people go for a fixed rate, partly because they are the most readily available products, but more importantly because they prefer to know what their payments are going to be every month, for a set period of time.
What is the longest you can fix a mortgage for?
In Europe and America it’s really normal to have really long fixed rates, but in the UK we’re different – you don’t tend to get anything longer than 10 years.
I’ve seen some seven year fixed rates, but five year and two year rates are the most common. It’s outside the norm to have anything outside of two to ten years.
Can I extend my fixed-rate mortgage before it ends?
No. Fixed rates are set for a period of time. Rate pricing is based on how banks can obtain mortgage funding from the wholesale money market. They’ll typically buy funds at a certain cost and then lend that back out at a set interest rate.
That tranche of funding will have a set end date, which is why you end up having a fixed rate for two years, or sometimes up to 28 months. In a stable interest rate environment, products can have an expiry date that’s slightly less than two or five years.
Extension of the rate itself doesn’t exist – it will just end. But in almost all cases, as long as you’re not in mortgage arrears, there’s always the ability to move onto a new deal and to avoid the variable rate. That saves a lot of money.
Will my mortgage automatically renew?
It will not. The reason is that banks understand that clients’ positions vary and their needs will change. Someone who previously wanted stability for a long time may not want that same stability again.
If we’ve got a client who’s coming off a five-year rate, you might assume they would want another five-year rate after that. But we need to understand their drivers and needs. Do they want to capital raise? Are they thinking about selling?
That’s where the standard variable rate plays a part – it’s an incentive for people to be on top of their finances. It also keeps this system buoyant and moving, with people avoiding that rate. So there’s no automatic renewal process, but we always contact clients as we approach that expiry date.
Should I stay with my current lender or switch to another one?
It’s always down to the circumstances, and these vary. For example, a client’s financial position may have changed slightly. Perhaps one applicant isn’t working or they’ve just gone self-employed.
We can’t change lenders if we’re not meeting the affordability requirements for a new mortgage. That’s where rate switching can be really useful, because staying with your lender doesn’t require reassessment of affordability or a property valuation. It doesn’t require a legal process as you’re not moving from bank to bank.
Provided that a client is not in mortgage arrears, the existing lender for residential mortgages will allow them to switch rate. That’s a helpful backstop if your position changes, and means you’re not held hostage on a variable rate.
Certain lenders will put their rates up for people who are remaining with them, though. It’s partly to do with their criteria and whether they prefer safe cases or whether risks are taken in lending that money. There can be a benefit of remortgaging away to avoid slightly higher rates to remain with that lender.
You might naturally want to remortgage to benefit from better rates, a better Loan to Value, to capital raise or do some debt consolidation. You may want to move home. Your preferences will tell us whether to explore the whole mortgage market and what options you will have.
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What are the pros and cons of switching my fixed-rate mortgage?
The big one is avoiding the standard variable rate. That’s absolutely critical because typically that will come in at maybe 1.5% more than other rates out there – or anywhere up to 3% more.
The variable doesn’t need to be tied to anything, so the bank can charge what they want. It’s not tied to the Bank of England base rate. Sometimes lenders compete with each other on their variable rates, but it’s always much higher than what’s in the market. Switching gets you better value – as long as it makes sense for your situation.
The disadvantage in that scenario can come in if advice hasn’t been given or a client hasn’t understood their options. Let’s say they take another fixed rate and then six months down the line they decide to sell, capital raise or change something about the mortgage.
We’re now within a fixed rate and there will be penalties to end that mortgage early. Taking advice could have avoided that.
It’s really important to understand the limitations of what you’re putting into place. Does it suit you? Is it going to be best suited for your plans and future situation? That is something we get to the core of immediately.
Can the bank refuse to renew my mortgage?
Yes, they can. The grounds for that are usually mortgage arrears. Banks can insist that those arrears are cleared before you’re able to choose another rate.
I’m also seeing a lot of old, pre-2008 interest only mortgages that are now coming up to the end of their term. Many clients have had these mortgages for a long time and haven’t remortgaged. They haven’t wanted to lose the benefit of interest only or have to pay the debt back – because the costs are a lot lower and interest rates have been extremely low over the last 10 to 15 years.
Now we have a situation where these mortgages are ending and there’s no ability to continue it. That’s pushing people to sell, and unfortunately, if people don’t get ahead of this, they risk repossession. A bank can always refuse to renew the mortgage if you’re in breach of their terms.
Should I remortgage at the end of a fixed-rate mortgage?
Yes, if that means getting a new rate in place of the old one. But it doesn’t always need to be a remortgage away from your existing lender, depending on your needs.
Perhaps you’ll get better value by remortgaging, because the market is competitive and lenders want to attract your business. But it needs to make sense. You might have a lender that’s really good with existing mortgage clients, and you have a good Loan to Value, with no changes.
Sometimes your current lender is better than the wider market – that can certainly happen. If a lender offers good rates to existing mortgage holders, that’s a real point of consideration. We want that journey to be easy for you.
You should always make sure there is a new rate. But remortgaging means moving away from your existing bank to another bank – and sometimes, that isn’t required.
How much will my mortgage increase when my fixed-rate ends?
It won’t always increase when a person’s fixed rate ends. It really depends on what’s happening in the economy, with the base rate and projections for the future.
Once we understand a client’s position, we can map that out. We do video calls with clients to show them the options with absolute transparency. You can ask questions in a completely interactive way. You’ll see variable rates, monthly payments and product fees on screen.
Post Covid, we saw interest rates increase by up to four or five times what they had been. It impacted many people. It was difficult for clients to get used to this new position.
We’re recording this in May 2026 and there has been conflict in Iran since the beginning of March. We’ve had a big spike in interest rates, up about 1% on average since February. Over the 12 to 18 months prior to that, rates were falling and many clients benefited from lower rates than they’d had from two years ago.
It’s not always the case that mortgage interest increases when a fixed rate ends. Our job is to ensure that when lower rates are available, we pick those up for you as we move towards completion.
It might be higher than your previous rate, but we’ll ensure that it’s going to be as low as possible.
Will there be any fees at the end of my fixed mortgage?
Not usually. As soon as the mortgage is paid off, the term is finished and there aren’t any fees. Sometimes people get to a fairly low balance on their mortgage and want to pay off a lump sum. If you’ve got a fixed rate, you may have a 10% or 20% overpayment facility – but if you pay off more than that in a year you may face an early repayment charge.
If we’re talking about the end of a fixed rate, where you’re moving from lender to lender, there’s generally a free valuation and free legals.
With a rate switch, the only fees to be aware of are the arrangement fee, which is typically zero, £999 or £1,499 depending on the product. The sole purpose of a product fee is to purchase a lower rate of interest on the mortgage.
If it’s a large mortgage of above £200,000, we’re more likely to look for lower rates with product fees – and those can be added to the loan. That lower interest rate will save more than the cost of the product fee. We always confirm that with clients showing them the details on screen.
You’ve demonstrated throughout this episode how a mortgage broker can help – anything else you’d like to add?
Preparation is key, and especially in relation to expiring fixed rates. It’s easy to leave things too late. But when we’ve arranged a mortgage for you, we contact you six months in advance of the expiry.
We explain what’s happening in the market and ask about your plans and your requirements. Then, by the time we get to the end of the process, we’re getting you a really good outcome.
The longer we’re involved to scour the market for you and reassign lower rates as they become available, the better the result is likely to be. We can save clients a lot in unnecessary interest – and huge amounts in comparison to the standard variable rate.
Key Takeaways:
- Always plan before your fixed rate ends, or you will automatically move to the much higher Standard Variable Rate (SVR), which will cost significantly more in interest.
- You have two main options when your rate expires: a “rate switch” with your current lender (easier, no reassessment) or a “remortgage” to a new lender (potentially better value, but requires full assessment).
- Fixed-rate mortgages are the most common product because they provide stability and certainty regarding monthly payments for a set period.
- Mortgages do not automatically renew, as lenders recognise that client financial positions and needs change over time.
- Preparation is critical; seeking advice six months in advance of the expiry date helps ensure you secure the and avoid the SVR.
THINK CAREFULLY BEFORE SECURING OTHER DEBTS AGAINST YOUR HOME. YOUR HOME MAY BE REPOSSESSED IF YOU DO NOT KEEP UP REPAYMENTS ON YOUR MORTGAGE.
YOU MAY HAVE TO PAY AN EARLY REPAYMENT CHARGE TO YOUR EXISTING LENDER IF YOU REMORTGAGE.