2024 is set to be a busy time for many homeowners, with the initial fixed term periods on mortgages expiring for a lot of clients across the market1, leading to some big decisions being required on remortgaging options.
What happens when your initial mortgage period expires?
Your initial fixed-term period will often expire after two years or five years, depending upon the specific deal, and after this, you’ll be put onto your mortgage lender’s Standard Variable Rate (SVR)2.
As you may be aware, the interest rates on the SVR may be higher than those that you can obtain with a fixed-rate deal2, so it’s always worthwhile taking action ahead of your fixed-term period expiring, to ensure that you’re not paying more than you need to, and that you’ve got a mortgage deal that fits your exact circumstances.
With interest rates having risen considerably in recent times, it’s also highly likely that the mortgage deals you will come across may be significantly higher than your existing deal, so there’s a lot at stake to ensure that you’re getting a fair rate when it comes to your renewal.
Remortgage or Product Transfer?
How does it all work? Ahead of your mortgage’s fixed-term period coming to an end, we’ll get in touch with you to discuss the options available to you, but to summarise, there is often a choice between a full remortgage, or a product transfer.
A product transfer is simply switching from one mortgage product to another, at your same lender. This is often a straightforward process and allows you to take advantage of some of the fixed-rate deals available from your existing lender, to prevent you going onto the Standard Variable Rate.
However, in some cases, there may be other deals available from other lenders in the market that are more suited to your current circumstances, and to access these would require a remortgage.
The remortgage process take longer, and is similar to that of when you first applied for a mortgage3. There would be evidence required of your earnings and property valuations undertaken, with more chance of fees payable to lenders, however, some may find that this inconvenience is offset through accessing deals that could possibly save more money and be of greater fit to your ever-changing circumstances.
How to know what’s most appropriate for you
It’s not always easy to know what’s right for you and your circumstances, so that’s where the value of professional mortgage advice comes in. We’re here to listen to your exact situation and to recommend the products that we believe are the most appropriate for you based upon looking at a wide range of lenders and exclusive deals that aren’t available on the high street.
It’s highly likely that your own lender will also reach out to you with offers of product transfers, however we would always recommend that you seek our experienced, professional advice before taking up any offers to ensure that these work in your interest as well as theirs. We’re more than happy to arrange both product transfers and remortgages, but pride ourselves in listening to your exact situation before giving bespoke advice that’s tailored to you.
Think carefully before securing other debts against your home. Your home may be repossessed if you do not keep up repayments on a mortgage or other debt secured on it.
Sources
- Statista (2023) Fixed rate mortgage loans coming up for renewal in the UK from 1st quarter 2022 to 3rd quarter 2024. Available at: https://www.statista.com/statistics/1399875/fixed-mortgages-for-renewal-by-interest-rate-uk/ (Accessed 21 November 2023)
- MoneySuperMarket (2023) What is a Standard Variable Rate mortgage?. Available at: https://www.moneysupermarket.com/mortgages/standard-variable-rate-mortgages/ (Accessed 21 November 2023)
- Experian (2023) Remortgaging. Available at: https://www.experian.co.uk/consumer/mortgages/types/remortgage.html (Accessed 21 November 2023)
All the information in this article is correct as of the publish date 30th November 2023. The opinions expressed in this publication are those of the authors. The information provided in this article, including text, graphics and images does not, and is not intended to, substitute advice; instead, all information, content and materials available in this article are for general informational purposes only. Information in this article may not constitute the most up-to-date legal or other information.
