What happens when a fixed rate mortgage ends?
The short answer
If you do nothing, your mortgage moves automatically onto your lender's standard variable rate. Nothing is cancelled and you keep your home, but the payment usually rises noticeably, often from the very next month.
You do not have to let that happen. Most lenders let you reserve a new rate three to six months early, and switching to a new deal with your existing lender is often quick and needs no affordability check.
Start looking six months out. It costs nothing, and it is the single easiest way to avoid a payment jump you did not plan for.
What the standard variable rate actually is
Every lender sets its own standard variable rate, usually called the SVR. It is the default rate your mortgage falls back to when a fixed or tracker deal ends, and the lender can change it more or less whenever it likes.
It is almost never competitive. Lenders rely on a proportion of customers not getting round to switching, and those customers subsidise the deals offered to everyone else. Sitting on an SVR is rarely a decision anyone makes deliberately; it is what happens when a letter gets filed and forgotten.
Why the jump can be so sharp
The payment change depends entirely on the gap between your old rate and the SVR, and that gap can be several percentage points. On a repayment mortgage, even a modest-sounding rate rise produces a payment increase that is anything but modest, because the interest applies to the whole outstanding balance.
The way to know what it means for you specifically is to run both rates through a calculator using your actual balance and remaining term. The difference is usually more than people expect.
See the difference Mortgage repayment calculatorEnter your remaining balance and term, then compare your current rate against your lender's SVR to see the monthly change.
When to do what
Product transfer or remortgage?
These are two different things and the distinction matters more than the jargon suggests.
| Product transfer | Remortgage | |
|---|---|---|
| What it is | A new deal with your current lender | Moving your mortgage to a different lender |
| Speed | Often days, sometimes done online | Typically four to eight weeks |
| Checks | Usually no affordability assessment or valuation | Full application, credit check and valuation |
| Cost | Usually no legal fees | Legal work often included free, but check |
| Rates | Sometimes competitive, sometimes not | Access to the whole market, often better |
The sensible approach is to get your lender's offer first, since it costs one phone call, then compare it against the wider market before accepting. A product transfer that is only slightly worse than the best available deal may still win on speed and simplicity.
If you cannot remortgage
Some people find they cannot move to a new lender: income has fallen, employment has changed, a credit file has taken a knock, or the property has dropped in value. This is more common than it sounds and it is not the end of the road.
A product transfer with your existing lender usually does not require a fresh affordability assessment, which means it often remains available when remortgaging does not. That is the single most useful thing to know if your circumstances have changed, and it is rarely explained clearly.
If the payment will be genuinely unaffordable either way, speak to your lender before the deal ends rather than after. Lenders have options they can offer, including extending the term or a temporary arrangement, and they are considerably more willing to discuss them with someone who calls early than with someone who has already missed a payment.
Should you fix again, and for how long?
There is no universally correct answer, and be sceptical of anyone offering one. What can be said usefully is what each choice buys you.
- A short fix gives you flexibility to move again sooner if rates fall, at the cost of doing this whole exercise again in two years.
- A long fix buys certainty. If knowing your exact payment for five years lets you sleep, that has real value even if it turns out to cost slightly more.
- A tracker follows the base rate, so payments move with it. Some have no early repayment charge, which suits people expecting to move or overpay heavily.
The question worth asking yourself is not which will be cheapest, since nobody knows, but how much a payment rise would actually hurt. If the answer is "a lot", certainty is worth paying for.
One thing worth doing while you are at it
A remortgage or product transfer is the natural moment to make a lump sum overpayment, since early repayment charges usually do not apply between deals. Reducing the balance can also drop you into a lower loan to value band, which may unlock a better rate on the whole mortgage.
Worth checking Mortgage overpayment calculatorSee what a lump sum at remortgage time would save in interest and how much sooner you would finish.