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What to do when your mortgage term ends.
If your fixed-rate mortgage term is ending and you’re preparing for an increase in interest rates, or you’ve been shopping around for better offers, you may be considering remortgaging. Here, we explain how remortgaging works.
When your fixed-rate mortgage term ends, there are some options to consider. Firstly, you can stay on your lender’s Standard Variable Rate (SVR) mortgage, or you can remortgage with a new deal - either with your current lender or a new one.
If you do nothing when your term ends, you will automatically switch to your lender's SVR - these are generally higher than fixed-rates, so your monthly payments are likely to increase.
If you choose to seek out different remortgage rates, you’ll need to find a new mortgage product, either variable or fixed, and move your mortgage balance to it. This is an opportunity to move lenders, and is a chance to secure a potentially lower interest rate.
Whether you want to remortgage to release equity release or your circumstances have changed (e.g. a job change or marriage), there’s lots of reasons why remortgaging might be right for you. If your fixed-rate period has come to an end, you may also get a better deal by switching rather than staying with your lender’s SVR.
Remortgaging involves transferring your existing mortgage to a new lender and taking out a new mortgage deal, rather than staying with your current lender. Essentially, this means getting a new mortgage on your current property.
It’s important to shop around for the best remortgage deals, as once you’ve made the switch you’ll have a new lender, which could mean different interest rates and payment terms.
Yes, a property valuation is generally needed when you’re remortgaging as lenders will require this step to assess the property’s value and calculate the loan to value (LTV) ratio. This helps to determine the terms of your new mortgage.
Loan-to-value is a ratio representing the amount of a mortgage compared to the value of the property being purchased. LTV is one of the most crucial factors for lenders when reviewing mortgage applications, as higher loan value can mean higher interest rates and a lower loan value indicates a lower risk of default.
A lower LTV ratio can make it easier for you to remortgage. If you want to improve your loan-to-value ratio, there are a few things you can do to help. If you’re currently a homeowner, you can consider making extra payments towards your mortgage. This helps to reduce the outstanding amount you owe faster - gradually lowering your LTV over time.
Read our helpful guide on saving vs overpaying on your mortgage for more information visit our mortgage support hub
The answer is yes. If you're looking to generate additional monthly income, investing in a buy-to-let property could be something to consider.
If you don’t have enough savings for a deposit or to purchase outright, a buy to let remortgage may offer a solution. By remortgaging your current home, you could unlock the funds needed to invest in a rental property.
Before making any decisions, it’s important to assess your financial situation and make sure you’re confident in your ability to keep up with the repayments as two mortgages can be quite financially demanding.
The best remortgage for you will depend on factors such as your income and your LTV.
Lenders often reserve the most competitive deals for borrowers with strong credit scores and stable or high disposable incomes. To boost your chance of securing a better rate, consider paying off any existing debts and improving your credit score. It’s also important to make a remortgage comparison to see which suits your situation best, whether that’s fixed, tracker or variable.
Understand the steps to remortgaging:
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