At a glance
When your fixed-rate or tracker mortgage deal ends, you’ll likely be put on your lender’s SVR.
SVR mortgages typically have higher interest rates than fixed-rate, tracker and discount mortgages.
When your fixed term ends, you can choose to stay on your lender’s SVR or remortgage to a new deal.
Remortgaging will generally save you a lot of money, though this does depend on your financial circumstances.
What happens when a fixed-term mortgage ends?
When your fixed-rate or tracker mortgage deal ends, your mortgage lender will typically put you on its standard variable rate (SVR) of interest. This will most likely be higher than the rate you’ve been used to. It can be a bit of a shock, as you may suddenly find yourself paying a lot more for your mortgage than you bargained for.
The difference to your repayments could be hundreds of pounds a month. If you don’t want to pay more than you need to, it’s vital to give yourself time to prepare and consider your options.
And while all good things may come to an end, it doesn’t need to be all bad news. The end of your fixed-term deal is a good opportunity to reassess your finances and maybe even find yourself a better deal.
Start your remortgage comparisonYour home may be repossessed if you don't keep up repayments on your mortgage.
What’s the difference between fixed-rate and SVR?
With a fixed-rate mortgage, your repayments remain the same for the length of your deal (term). This could be for two, five or even 10 years.
As you can guess from the name, a standard variable rate (SVR) mortgage is variable, which means the interest rate could go up or down at any time. Although it can be influenced by the Bank of England base rate, the decision to increase or lower the SVR is entirely in your lender’s hands. It can change it whenever it wishes, without giving you a reason.
The interest rate on an SVR mortgage is almost always higher than a fixed-term mortgage.
To give you a rough idea, let’s say you’re repaying a £150,000 mortgage over 25 years and you’re on a two-year fixed-term 4% mortgage deal. At the end of the deal, you’re moved onto your lender’s SVR, which is 7%. You’d see your repayments go from £792 a month to £1,060 – that’s an increase of £268 a month.
Find out more: remortgaging calculator
What are my options when my fixed-rate mortgage term comes to an end?
At the end of your fixed-rate mortgage term, you have two main options:
Stay on your lender’s SVR
Remortgage to a new deal.
Option 1: Stay on your lender’s SVR
While staying on the SVR won't make financial sense for most people, there are some circumstances when it might be the right option. For example:
You might be moving house soon and want the flexibility of being able to get a new mortgage when you move
You might be very close to paying off your entire mortgage, in which case it could be easier to just pay a higher interest rate until you're mortgage free.
It’s always a good idea to talk to your lender and find out how much your future mortgage repayments could be affected if you stay on the SVR. Weigh up the pros and cons so at least you’ll be making an informed decision.
Pros and cons of a standard variable rate
Standard variable rate pros
Early repayments charges usually (but not always) end with the fixed-rate period – on an SVR you should be able to pay off some or all of your mortgage early, or even switch to another deal without any penalties.
Interest rates might fall – if this happens, your monthly payments will go down too, and you could choose to move to a new lower-rate deal at that point.
Remortgaging might be more expensive – once you add up booking and arrangement fees, it might cost more than paying a higher interest rate.
No credit check – if you do nothing and stay as you are, there’s no need to go through the whole credit check process again.
Standard variable rate cons
Higher interest rates – the SVR will nearly always be higher than a fixed-rate deal, so you should expect to pay more for your mortgage each month.
The SVR is unpredictable – lenders set their own SVRs and they don’t necessarily track the Bank of England rate – meaning the lender can raise it whenever it wants for whatever reason. This uncertainty can make it hard to budget each month.
SVRs can be unaffordable – if you’ve been on a fixed-rate deal for a number of years, the increase in monthly repayments can come as a bit of a shock. If you find yourself struggling and can’t make the repayments, you could risk losing your home.
Top tip
Don’t just assume that the early repayment charge (ERC) will be dropped once your fixed-rate term ends. Although extremely rare, in some cases, it could run beyond that point. Check this carefully if you decide to remortgage, as the ERC could run into thousands. It might be better to stay on your lender’s SVR for a while, rather than jumping ship immediately.
Option 2: Remortgage to a new deal
If you decide to remortgage, you could either look around for a new deal with a new lender or see what your current mortgage provider has to offer.
If they can offer you a good deal, it might be worthwhile remortgaging with your current lender. This is called a ‘product transfer’. There could be lower set-up costs involved, and the process may be quicker. However, it’s always worthwhile shopping around to see if you can find a better deal elsewhere, especially if interest rates are low.
Pros and cons of remortgaging
Remortgaging pros
Remortgaging is generally quicker and simpler than applying for your first mortgage.
If interest rates are low, you could lock in a great fixed-term deal for the next few years.
If your home’s gone up in value, you may have built up more equity and need a lower loan-to-value (LTV) mortgage. Generally, the smaller the proportion of the property value you're borrowing, the better the deal you get.
You'll probably save money – remortgaging to a cheaper deal could potentially save you hundreds of pounds in repayments each month.
Remortgaging cons
Remortgaging with a new lender could mean going through the whole process of applying for a new mortgage again, with another credit check and affordability assessment, which could affect your credit score.
The set-up costs of remortgaging could outweigh the benefits of moving onto a lower interest rate if you have a relatively small mortgage.
Remortgaging might not be suitable for you – it might be more difficult to remortgage if you have very little equity in your home, are close to retirement age or if the value of your home has gone down.
Before you decide to remortgage, it's worth taking expert advice from an independent mortgage adviser.
How much does it cost to remortgage?
When you remortgage, there may be some additional costs to consider. These could (but won't always) include:
Mortgage arrangement fee
Booking fee – to secure the offered deal
Valuation fee
Conveyancing fee.
Costs can vary and not all lenders will charge all of these fees when you remortgage. It’s important to consider the potential costs to see whether it’s worthwhile remortgaging or not. A broker can help you work this out, although they may charge you a fee themselves for the service.
Alternatively, you can get fee-free, expert advice on different types of mortgages, remortgaging and the costs involved from our trusted mortgage partner, London & Country Mortgages Ltd.
Looking for a mortgage?
Find a mortgage that's right for you.
FAQs
When is the best time to remortgage?
Ideally, it’s best to start looking for new mortgage deals around four to six months before your fixed-term deal is due to end. This will give you plenty of time to sort the paperwork so you can switch straight to your new deal without having to pay the SVR.
Most lenders will let you lock in a rate with them up to six months before your current deal ends.
What happens if my remortgage application is declined?
You’ll have no choice but to stay on your current lender’s SVR for the time being. Try to find out why your application was refused, so you can do something about it and improve your chances for next time.
The lender’s criteria may have changed since you first applied for a mortgage. Under Financial Conduct Authority regulations, lenders must check that you can afford your mortgage repayments now and in the future. This means they’re a lot pickier about who they lend to than they may have been before.
Read more on the common reasons why a mortgage application is declined.
Is remortgaging the best option?
While it’s a good idea to consider remortgaging, it might not be the best option for you.
It might be easier to stay on your current lender’s SVR, especially if you’ve the chance to overpay without an ECR penalty. Likewise, if you have a relatively small balance on your mortgage. For example, if it’s less than £50,000, it might be cheaper to stay on the SVR than paying to remortgage.
Or it could be that your financial situation isn’t currently stable enough to remortgage. Say you’ve gone freelance or your partner is no longer working. If you can afford the repayments, it might be better to stick with the SVR until can show you’re financially stable again.
Looking for something else?
With over 10 years’ experience writing, editing and managing content, Emma has written and edited for some of Australia’s leading financial comparison brands, including Savings.com.au, Your Investment Property Magazine, and Your Mortgage.
Ele Clark is an award-winning editor who has held leadership roles at Which? and news-stand publications in London and Dubai. She’s appeared across the press and media, including BBC’s Panorama. With almost 20 years’ experience in personal finance, insurance and consumer journalism, she leads a talented team at Compare the Market, creating insightful, accessible content to help people make informed financial decisions.
Charlie is a senior commercial leader with close to a decade of experience across the UK’s leading personal-finance and comparison platforms. Before joining Compare the Market as Head of Commercial in 2024, he held senior commercial roles at TotallyMoney and MoneySuperMarket Group.
Our content is written by a Compare the Market expert, backed by data and enhanced by technology. Find out how we ensure accuracy and quality in our Editorial Guidelines.
