For many households, the mortgage is one of their biggest monthly expenses. Yet when a fixed-rate mortgage deal comes to an end, it can be surprisingly easy to let things roll on without reviewing the options.
Life gets busy. There are school runs, work commitments, rising household bills and everything else that comes with running a home and family. If your mortgage lender moves you onto its Standard Variable Rate (SVR), you might not notice the difference straight away, particularly if the increase is absorbed into your usual monthly outgoings.
But over time, that decision could cost you thousands of pounds.
Reviewing your mortgage before your current deal ends could help you reduce your monthly payments, make better use of your money and feel more confident about your household finances.
So, when should you start looking, and what could those potential savings mean for you?
What happens when your fixed-rate mortgage ends?
When you take out a fixed-rate mortgage, your interest rate is agreed for a set period, commonly two, five or ten years. During that time, you generally know what your monthly mortgage payments will be, assuming your mortgage balance and other terms remain unchanged.
When the fixed-rate period ends, your mortgage will usually move onto your lender's Standard Variable Rate (SVR) unless you arrange another deal or have a different arrangement in place.
Your lender's SVR can be considerably higher than the rates available on some new mortgage deals. As a result, your monthly repayments could increase, sometimes by a significant amount.
Of course, not everyone will automatically benefit from switching mortgages. The right option depends on your circumstances, the equity in your property, your credit profile, any fees involved and the deals available at the time.
However, assuming your existing mortgage is still the right option without checking could mean missing an opportunity to make your money work harder.
How much could not reviewing your mortgage cost you?
Let's look at what an additional £200, £300 or £400 a month could mean for your household budget.
These figures are examples of potential differences in monthly payments, rather than guaranteed savings.
- £200 a month is £2,400 a year. That could contribute towards a family holiday, help build an emergency fund or cover some of the costs of home improvements.
- £300 a month is £3,600 a year. That could provide a meaningful boost to your savings, help you invest for the future or give you more breathing room when household expenses increase.
- £400 a month is £4,800 a year. That could make a real difference to your financial plans, whether you're saving for your children's future, paying down other borrowing or building towards retirement.
Over three years, those differences would add up to £7,200, £10,800 or £14,400 respectively.
That's a substantial amount of money to have less available for the things that matter to you.
The actual cost of staying on an SVR will depend on your mortgage and the rates available. It's also important to compare the overall cost of switching, including any arrangement fees, valuation costs and other charges, rather than focusing only on the monthly repayment.
What could you do with the money instead?
This is where reviewing your mortgage becomes much more than finding a lower interest rate.
Imagine having an extra £200 or £300 available each month. What could that mean for your family?
Perhaps you could start putting money aside for a holiday without relying on a credit card. You might feel more comfortable building an emergency fund, particularly if you have children or a household that depends on one or two incomes.
You could use the money to make home improvements, save towards a future move or contribute more towards your pension or ISA, depending on your priorities and wider financial circumstances.
For some people, the benefit might be less tangible but just as important. Having more room in the monthly budget could mean feeling less stretched between payday and the end of the month.
And if you're approaching retirement, reducing your mortgage costs could help you understand whether your plans for working less or finishing work altogether are achievable.
There isn't one right answer. The important thing is that money you're spending on unnecessary mortgage costs may be money you could otherwise put towards your own goals.
Why you should review your mortgage six months before it ends
One of the most useful things you can do is start the conversation around six months before your current mortgage deal expires.
This gives you time to understand your options without leaving everything until the last minute.
1. You have time to explore your options
A mortgage review can help you understand whether staying with your current lender, switching to a new deal or remortgaging with another lender is likely to suit your circumstances.
The lowest interest rate advertised isn't necessarily the best option for everyone. Fees, early repayment charges, the remaining mortgage term and your plans for the property can all influence the decision.
Starting early gives you more time to consider the bigger picture.
2. You can plan ahead for affordability
Your circumstances may have changed since you last arranged your mortgage. Perhaps your family has grown, your income has changed, you've taken on new financial commitments or you're thinking about moving house.
A review gives you an opportunity to consider whether your current mortgage still fits your life and what your payments might look like going forward.
If your circumstances are more complicated, allowing extra time can be particularly helpful.
3. You can avoid leaving everything until the last minute
Mortgage applications can take time, and lenders need to assess your circumstances before making an offer.
Starting early allows time to gather paperwork, check affordability and deal with any questions that arise. Depending on the lender and the product, you may be able to secure a new rate in advance of your existing deal ending.
The timing and suitability of a new deal will depend on the terms available, so it's worth discussing this with a mortgage adviser.
Most importantly, you don't have to wait until your current deal has ended to start asking questions.
Is remortgaging always the right answer?
Not necessarily.
For some homeowners, a new deal with their existing lender may be suitable. Others may benefit from comparing products across the wider market. In some circumstances, staying on the current mortgage could make more sense once fees and other factors are taken into account.
Your plans matter, too. If you're considering moving, making significant overpayments or changing the length of your mortgage, these decisions should form part of the conversation.
A mortgage review isn't about switching for the sake of it. It's about understanding what's available, how the options compare and whether your current arrangement still works for you.
Your mortgage should fit your life
Your mortgage is likely to be one of your biggest financial commitments, but it shouldn't be something you only think about when a problem arises.
As your life changes, your financial priorities change with it. You may be supporting children, building savings, planning for retirement or simply trying to make the household budget feel more manageable.
Taking the time to review your mortgage can help you understand whether your current deal still makes sense and whether there is an opportunity to free up money for the things that matter most.
If your fixed-rate mortgage ends within the next six months, now is a good time to start the conversation.
At Willow Tree Financial Services, we believe mortgage advice should be about more than finding a rate. It's about understanding your circumstances, explaining your options and helping you make a decision that feels right for your wider financial plans.
Get in touch with our team to discuss your upcoming mortgage renewal and find out what options may be available to you.
Your circumstances and the mortgage products available will determine whether switching is appropriate. Mortgage advice and any recommendation will depend on a full assessment of your needs and financial position.
Download our Guide to Remortgaging on our Resource page:
https://www.willowtree-fs.co.uk/resources/guide-to-remortgaging
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At Willow Tree Financial Services, we offer personalised advice on Financial Planning, Mortgages, Investments, Pensions, Personal & Business Protection, and Wills, Trusts & Estate Planning, all tailored to your individual goals and circumstances.
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Willow Tree Financial Services is a trading style of Rachael Panteney who is an appointed representative of Quilter Financial Services Limited, which is authorised and regulated by the Financial Conduct Authority.
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