When should you start looking for a new deal?
The best time to start comparing remortgage deals is three to six months before your fixed rate expires. Most mortgage offers hold for three to six months, so if you lock one in early you can complete the switch the moment your fix ends, with no gap on the SVR.
Some lenders now let you reserve a rate up to six months ahead, which gives you even more room to plan. If rates are climbing, booking one early shields you from further rises. If rates drop before you complete, some lenders will move you onto a lower rate that has appeared in the meantime.
A good broker keeps a diary note and gets in touch well before your fix ends. At Clearview Mortgage Solutions we reach out to clients ahead of their deal expiring, so nobody slips onto the SVR without meaning to.
What happens if you fall onto the SVR?
If your fixed rate ends and you have not sorted a new deal, you land on the lender’s standard variable rate. The lender sets the SVR and can change it whenever it likes. It is nearly always well above the best fixed or tracker rates on offer.
Sitting on the SVR is not a disaster, and it does leave you free to remortgage with no early repayment charge to pay. Even so, each month there costs you more than you need to spend, so line up a new deal as soon as you can.
Can you remortgage before your fix ends?
You can remortgage whenever you want, but while you are inside the fixed period you will normally owe an early repayment charge. An ERC is usually a percentage of the balance you still owe, often around 3% to 5% in the first year and dropping a little each year until the fix ends.
Now and then it still pays to cover the ERC and switch early. That can happen when rates have dropped sharply and the saving over the remaining years of a new fix beats the one-off penalty. Your broker can work out whether an early switch stacks up in your case.
Some fixed-rate products carry no ERC beyond a certain point, for example five years into a ten-year fix. Check your mortgage terms, or ask your broker to read them over, so you know exactly when you can switch with nothing to pay.
Product transfer vs remortgaging to a new lender
When your fix ends you have two main routes. A product transfer keeps you with your current lender and moves you onto one of their new deals. It tends to be simpler and quicker, and it may not need a fresh valuation or a full affordability check.
Remortgaging to a new lender means a full application, but it opens up the whole market. The sharpest rate is not always with your current lender, so weighing both routes is how you land the best deal. A broker can run the two side by side and point you to the stronger one.