Posted on: January 29, 2024
What are my options at the end of my fixed rate….?
Borrowers have 3 basic options, do nothing, do a product transfer or remortgage to another lender. Details of the 3 options are as follows……
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Do nothing.
If you do nothing you will go onto your lenders standard variable rate. This generally is considerably higher than any potential fixed or tracker rate they might offer you. But it is important to check the details of the reverting rate that you will go on to. In general terms it is not advisable to go onto the lenders standard variable rate because as a general rule this will cost you extra interest. But there are exceptions to this rule, for example….
- You are selling up shortly after the fixed rate and do not want to pay an Early Repayment Charge.
- You wish to repay a large lump sum to your mortgage at some point in the near future.
- The lenders standard variable rate is lower than the retention or remortgage rates on offer.
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Take a Retention product.
Your lender will in most cases offer you another fixed or tracker rate. The advantages of this can be that it saves you further interest compared to standard variable rate and of course it is considerably easier than the more time consuming remortgage option. But of course your current lender may not have the most competitive product.
If your lender does not offer you a competitive retention rate when compared to its competitors, you may decide that you wish to remortgage to another lender to obtain a cheaper rate. This does involve a full application and the new lender will need to consider this. There is also the extra paperwork such as proof of income, ID and bank statements. And you will need to deal with a solicitor to deal with the legal work. In general terms it is fair to say that lenders will offer incentives such as free valuation fees and free basic legal costs.
The above content is a broad summary of a borrowers options, but does not constitute specific advice. Making sure you make the right decision is essential as making a mistake could cost a borrower thousands of pounds in unwanted interest or penalty. For this reason it is important that borrowers take the advice of mortgage adviser. Your mortgage adviser can make an impartial recommendation that suits your needs.
For more details you can contact 0118 9410026 and speak to either Luke Spires or Craig Power or contact them by email at luke.spires@villagefs.co.uk or craig.power@villagefs.co.uk
Your home may be repossessed if you do not keep up repayments on your mortgage
The information contained within was correct at the time of publication but is subject to change.
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