What happens when my fixed-rate mortgage ends?

Key takeaways

• When your fixed term ends, your rate will usually switch to your lender's standard variable rate (SVR), unless you arrange a new deal in advance

• This is usually a higher interest rate, meaning your monthly repayments could go up by hundreds of pounds

• For that reason, most people opt to remortgage, usually for another fixed-rate deal and the certainty that brings or they opt to try a tracker or variable rate mortgage

• You can transfer your mortgage to a new product with the same lender or switch to a new mortgage provider entirely

• Start looking at other deals around four to six months before your current fixed-rate mortgage ends

What can I do when my fixed-rate mortgage ends?

When your fixed-rate mortgage ends, you have three options:

1) Do nothing and stay on your mortgage provider's SVR

When your fixed term comes to an end, you'll automatically be switched to your lender's SVR. 

While there's a small chance that the interest rate will be lower, especially if the Bank of England's base rate is low, it's much more likely that the SVR is higher than your fixed rate. 

Additionally, the SVR can change at any time and is set at your lender’s discretion, often influenced by base rate movements but not directly tied to them.

2) Take a product transfer

A product transfer is when you switch to a new mortgage deal with your current lender instead of moving to a different provider.

Most borrowers whose fixed-rate deal is coming to an end can apply for a product transfer, if they meet their lender’s criteria and are up to date with their mortgage payments.

This can be the most straightforward route as you won’t need all the affordability checks that come with taking out a new mortgage, making it quicker and less expensive.

If your circumstances have changed, it can also be beneficial to stick with a lender that you have a good repayment history with.

3) Remortgage to a new deal

A product transfer doesn't always offer the most competitive rate and, by staying with the same lender, you may miss out on a better deal elsewhere, so always look at what is available across the market.

You may be able to remortgage to a new deal with a different lender, avoiding the higher interest rates that come with an SVR and find a better fixed deal than your current lender is offering.

If you want to remortgage, it's best to plan around four to six months before your fixed term ends. Our guide When is the best time to remortgage your home? goes into more detail.

Remortgaging with a new lender requires having to go through the mortgage application process again, including credit check.

And if your circumstances have changed - for example, if you've become self-employed, accumulated debts, or have a new baby - this may have an impact on an application with a new lender.

It's also worth bearing in mind that remortgaging comes with set-up costs and admin fees.

What is the penalty for leaving a fixed-rate mortgage?

If you wait until your fixed-rate deal ends, there shouldn’t be any penalty. But if you leave it'll come at a cost. In most cases, you will have to pay an Early Repayment Charge (ERC) to leave before your fixed term comes to an end.

How much an ERC costs depends on the outstanding mortgage amount and how many years you have left in your term.

Usually, ERCs range from 1% to 5% of the remaining loan, typically decreasing each year of the fixed term; confirm exact terms with your lender.

If you want to switch to a better mortgage deal without having to pay an ERC, you should plan your remortgage to coincide with the end of your mortgage deal. Alternatively, if you need some flexibility, it may be worth staying on your lender's SVR for a few months after your fixed term has ended.

Can you extend a fixed-rate mortgage?

Yes, you have the option to extend your mortgage term. This involves adding to the number of years that you were originally intending to pay back your loan.

While extending your mortgage term can lower monthly repayments, it means a higher cost in the long term - as you'll pay more in interest over the total term of your mortgage. 

However, if you're coming to the end of your fixed term and the interest rate is set to rise by a lot, extending your mortgage term can be a way of making your monthly repayments more affordable.

Another solution to lower monthly repayments is to switch to an interest-only mortgage, which involves paying only the interest each month, leaving the capital debt unchanged. There are risks involved in this too, so weigh up all your options carefully.

Can I change my fixed rate to a variable rate?

Yes, you can change your fixed-rate mortgage to a variable-rate one.

While a fixed-rate provides more financial stability, certainty and protection from rising interest rates, a variable rate can be more suitable if you're looking for a flexible, short-term plan.

You usually won't have to pay any ERCs if you want to move to a new deal or provider, nor will you have to pay any fees if you want to pay off some or all of your mortgage early.

Read our guide Should I fix my mortgage or go variable? for more information.

Is remortgaging right for me?

While remortgaging typically helps to keep your monthly repayments down, as you may be able to lock in a lower-interest, fixed-term deal, it's not suitable for everyone.

For example, it might be more difficult to remortgage if the value of your home has decreased, or if you have very little equity in your home or are close to retirement age.

If your financial situation has changed - such as going freelance or being out of work – your finances might not be stable enough to remortgage.

In these instances, it may be better to stick with your lender's SVR for a few months until you're in a more financially stable position to get a new mortgage.

Finally, if you have a relatively small balance remaining on your mortgage, it may work out cheaper to be switched to your lender's SVR than paying for the fees that come with remortgaging.

On an SVR, you can also pay off some or all of your mortgage early without penalty.

Compare mortgage deals

Whether you're a first-time buyer or home mover you'll want to shop around for the best possible mortgage deal.

We can help you find a deal to suit your needs. All you need to do is provide us with a few details about yourself, your property and your current mortgage (if you have one) and we'll do the rest.

You can sort through a range of mortgages offered by lenders from across the market.

Make use of our mortgage repayment calculator to see how much your repayments could cost you. You can also use our affordability calculator to find out how much you could borrow for your new home.

Your home may be repossessed if you do not keep up repayments on your mortgage.

Other useful guides

How to get a mortgage you want

How much does it cost to remortgage?

When is the best time to remortgage your home?