Are you a homeowner with a fixed rate mortgage ending soon? 

Here's how to avoid overpaying!

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How do fixed rate mortgages work?

A fixed rate mortgage is one of the most popular types of home loans in the UK, offering homeowners the reassurance of predictable payments. Unlike variable rate mortgages, where interest rates can fluctuate over time, a fixed rate mortgage locks in your rate for an agreed period - providing financial stability and protection from market volatility.

If you’re currently on a fixed rate deal, understanding how it works and what happens when it ends is crucial to ensure you don’t end up paying more than you need to. Let’s break it down:

1. What is a fixed rate mortgage?

A fixed rate mortgage means that the interest rate you pay on your home loan stays the same for a predetermined period. This can range from two, three, five, or even ten years, depending on the terms of your deal. The key advantage of this type of mortgage is that your monthly repayments remain consistent, making it easier to budget and plan for the future. No matter what happens to interest rates in the wider market, your rate—and your repayments—will stay the same until the end of your fixed term. This stability makes fixed rate mortgages a popular choice for homeowners who want peace of mind, especially during times of economic uncertainty or when interest rates are expected to rise.

2. How does a fixed rate mortgage benefit you?

There are several reasons why homeowners choose a fixed rate mortgage over other types of home loans. The biggest benefits include:

Predictability and stability – Since your interest rate is locked in, you know exactly what your mortgage repayments will be each month, making it easier to manage your finances.

Protection from rate rises – If interest rates in the UK increase, you won’t be affected while your fixed term is active. This is particularly beneficial if rates are expected to climb.

Easier household budgeting – Because your mortgage payments won’t change, you can plan your monthly expenses with confidence, without worrying about unexpected increases in your mortgage costs.

Peace of Mind – Unlike a variable or tracker mortgage, where payments can fluctuate, a fixed rate mortgage eliminates uncertainty, giving homeowners greater financial security.

However, it’s also worth noting that fixed rate mortgages may not always be the cheapest option, particularly if interest rates drop significantly during your fixed period. Additionally, they often come with early repayment charges (ERCs) if you want to leave the deal before the term ends.

3. What happens when your fixed rate mortgage ends?

Many homeowners sign up for a fixed rate mortgage and enjoy years of predictable payments—but what happens when that fixed term expires? This is where  borrowers may get caught out. When your deal ends, your mortgage will automatically switch to your lender’s standard variable rate (SVR) unless you take action. The SVR is often much higher than the rate you were previously paying, and crucially, it can change at any time depending on market conditions.

For example, if your fixed rate deal was at 2% interest, but your lender’s SVR is now 6%, your monthly repayments could increase significantly—potentially adding hundreds of pounds to your mortgage costs each month.

Many homeowners don’t realise this until their mortgage payments go up, at which point they may have missed out on better deals. That’s why it’s essential to plan ahead and explore your options before your fixed term expires.

4. What are your options when you fixed rate ends?

When your fixed rate mortgage is nearing its end, you generally have three main choices:

Remortgage to a new fixed rate deal – This involves switching to a new fixed rate mortgage, either with your current lender or a different provider. Remortgaging can help you secure a better interest rate and avoid being moved onto a higher SVR.

Switch to a tracker or variable rate mortgage – If you’re comfortable with potential fluctuations in interest rates, a tracker or variable mortgage could be an option. These types of mortgages typically move in line with the Bank of England base rate or your lender’s internal rate, meaning payments could go up or down over time.

Do nothing and stay on the SVR – This is usually the least cost-effective option, as the SVR is often much higher than other available rates. Unless you take action, this is what will happen automatically when your fixed rate deal comes to an end.

5. When should you start looking for a new mortgage deal?

If your fixed rate deal is ending soon, timing is everything. Many mortgage lenders allow you to lock in a new deal up to six months before your current one expires. This means you can secure a competitive rate in advance, giving you peace of mind and ensuring a smooth transition when your existing deal comes to an end. Failing to plan ahead can lead to higher repayments and fewer options, so it’s always best to start exploring your remortgaging choices early. A professional mortgage broker can help you find the most suitable deal based on your circumstances.

Final thoughts

A fixed rate mortgage provides stability, but once your deal ends, the choices you make can have a big impact on your finances. If you don’t act in time, you could find yourself on a much higher interest rate—potentially costing you thousands over the course of your mortgage. By understanding how fixed rate mortgages work, what happens when your deal expires, and how to secure the best possible rates, you can take control of your mortgage and make sure you don’t pay more than you need to.

The key takeaway? Be proactive, plan ahead, and explore your options early. Whether it’s remortgaging to a better deal or seeking expert advice, taking action before your fixed rate expires is the smartest way to save money and protect your financial future.