When fixed term ends

[purpleme12]

When your fixed rate mortgage ends...
Can someone please walk me through what happens and what choices you've got and if it costs you money to organise.
As if I was a child.
Because it's all new and I don't really know

You can do nothing, and transfer onto the SVR for whoever has your mortgage. Given the current interest rates, this is likely to increase your monthly payments, but not require any additional fees.

Or you can look - with the current mortgage provider or with someone else - for a different deal. It will likely cost, and your monthly payment is likely to go up, but might be a better deal than above.

Oh ok so if I do a different deal I would have to pay fees to do that? How much would you normally have to pay?
And also if I do that is it like when you first get a mortgage when you have to send in your last 3 month's bank statements? (For if you stay with current provider or go with different lender)

If your fix term (eg 2%) ends on 31 December, from 01 January you will move into your mortgage lenders SVR - standard variable rate (eg 5%).

If you do nothing, your monthly mortgage rate will increase.

You can stay on this rate as long as you like. This is not usually recommended.

You can either remortgage with your existing mortgage lender (eg Halifax) or remortgage to a different lender (eg Barclays).

Each mortgage lender will have a range of mortgages (eg 4% fix for 3 years or 4.5% fix for 5 years).

It is recommended you go through an independent mortgage broker - L&C - to check the range of mortgages available to you (eg 4.5% with Halifax or 4.4% with Nationwide)

You then choose the mortgage that best suits your circumstances and your broker will arrange everything for you.

Check if you can overpay, and any early settlement fees.

It is usually recommended you try and remortgage 3 to 6 months before your current deal ends.

Another deal except for the current lenders SVR is likely to have fees. Fees vary depending on the provider and product.

If you just transfer to another deal with the same provider, you often don't need to show bank statements etc again.
If you move to a different provider you are almost certain to require to be checked for affordability.

If there is an arrangement fee to pay, you can add this to your mortgage. Money saving expert had a calculator: eg:

5 year fix at 5% with £999 arrangement fee OR 5 year fix at 5.5% with £99 arrangement fee.

Ok I think I get it.

If I get another deal with same lender would I still have to pay fees for it?

Probably.

If you contact your existing lender when you're within six months of the end of your fix then they should offer you a new fixed rate.

You can also shop around for a new lender (either using a broker or doing your own research) to see if you can get a better rate. Bear in mind though that if you change lenders you will have to go through the affordability checks, property valuation, etc again.

Oh ok so if I went with different lender I'd have to send in ID, payslip, 3 months bank statements? And you say they'd have to do a property valuation again? Would they or I have to do anything else?

Our fixed term came to an end early last year and what happened was our current mortgage lender wrote to us a few weeks before and offered us a new fixed term mortgage. We accepted the offer as it was a competitive one and there were no fees to pay. So check with your current provider what they can offer you if they haven’t already contacted you.

When does your current deal end OP? YOu can start to look about 4 or even 6 months before.

Staying with your current lender but going onto a new deal would be a product transfer, looking for a new lender would be a remortgage. There are likely to be fees and some paperwork involved but especially through a broker should be quite a straightforward process and they should talk you through it so you don't feel confused at any point.

I have done this a couple of times, most recently we had used a broker to sort out our mortgage previously so they contacted us six months before it came to an end and had a number of different options that they could offer us.

We didn't need to provide anything or have another survey as we switched product with the same lender, and the fees were added to the mortgage.

When I did it and changed lender, we had to provide bank statements etc and have another survey.

Ok thank you I didn't know the names of what each one was called.
So if I did a product transfer I wouldn't need to send in last bank statements and payslips but if I did a remortgage I would do?

So you're constantly having to pay fees and fees and fees until your mortgage is finished?
How much was your fee?

Mine expires in the spring. I’m watching the rates atm. If inflation peaks in January we might see better rates than are on offer right now.

I’m planning to stick with my existing lender for ease, there’s not that much difference in the market generally.

Theres no legal fees if you stay where you are(although some banks pay them). Different products have fees, others don’t, my current offer includes 4.88% with a £1000 fee or 5.19% with nil fee. You can add the fee to your mortgage if necessary.

My lender sends me a lovely letter with about 20 options on it for me to do the maths on including products with an arrangement fee and then I ring them up and say I would like option x and then they do it. Nothing further required.

You don't have to keep paying fees. As people have already said you can just stay with your existing mortgage but you will have a higher monthly payment.

Also not all new mortgages require you to pay a fee.

Gosh it sounds complicated

You say that but it probably won’t be. You haven’t said when your fixed rate comes to an end but in all likelihood your current lender will write to you well before it ends offering you a new product. As long as it’s a decent offer compared to what other building societies are offering, most people would accept it and then there is no hassle.

Your mortgage is running out.

How much is mortgage is outstanding?

How much is the house worth in the mortgage providers surveyors eyes.

Do you want to borrow more?

R u putting cash in to bring the mortgage down?

Things like if your property is freehold or leasehold will entitle/exclude you from certain deals, as is your credit rating on how well you have been paying your other commitments.

How long are you staying in this property is another factor.

It really isn't complicated OP, and you've done the hardest bit of getting your first mortgage originally. Speak to a broker, its their job to talk these things through with you.

As someone who works for a broker I'm interested in this thread, we clearly need to do more as professionals to explain these processes. We are working on a First time buyer guide but sounds very much like a first time remortgager (for want of a better phrase) one would be useful too.

Yes it would be helpful to me.

Thank you for everyone's replies I know a bit more than before!!

We found an independent mortgage advisor through the money saving expert website, although you could google one in your area. Our one was brilliant and didn't charge any fees to us. If you want me to pm you his details, he can do it all remotely so wont matter where you in the UK.

Yes please

Pm sent. I promise I'm not on commission or anything!