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Advice for borrowers coming to an end of fixed rate

Journalist: Rachel Mortimer, The Times

ended 09. January 2023

What are your top tips for borrowers coming up to remortgage or looking for a new deal in the coming months? 

Rates are falling, so if a fixed rate is expiring should the borrower wait on a variable rate for fixed rates to fall even further? Or lock in now? 

What about a new borrower taking out a mortgage for the first time? 

16 responses from the Newspage community

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Samuel Mather-Holgate
Independent Financial Adviser at Mather and Murray Financial
Each client has different circumstances which shape advice, but there are general points to consider. Interest rates are expected to top out at about 4 or 4.25%, that's only a max move of 0.75% therefore if a variable rate is more than 0.75% cheaper it makes sense to opt for this. You'll benefit from lower initial payments that will gradually creap up but then come back down again once the central bank is forced to lower rates as inflation falls away and they look to save a broken economy. Of course, where the rate will go in the future is a prediction and if you want certainty then that will cost you in the way of a premium on a fixed rate. If you have savings, work out your loan to value and see if stumping up a lump sum could put you in a new rate bracket that could be significantly lower. Normally rates change at 50%, 60% and 75%.
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Justin Moy
Managing Director at EHF Mortgages
Don't panic and choose the first product your lender may send you on a renewal letter. With rates slipping downwards, there will be better products either from your lender or the wider mortgage market. Engage with an Independent Mortgage Broker who can skillfully map out a plan for your next mortgage, up to 9 months in advance. This is really the time to engage with a professional who is looking at the market each and every day, and will make the journey to a new product as pain-free as possible. Don't go back directly to your lender, they are not in a position to give full advice, and will deal with your request as 'Execution-Only' - so you are responsible for picking the product. They won't comment on the wider market, asuitability of a product to your needs, and there is no comeback if it is wrong. Brokers will do all of that for you.
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Riz Malik
Independent Financial Adviser at R3 Wealth
Many people are concerned that if they fix now, they might be doing so at the top of the market. The Bank of England predicts that inflation will fall towards the end of the year, and given the current economic climate, rates may fall even further but no one knows when. Those looking to 'lock in' rates should think carefully about the term they want to lock in for.
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Rita Kohli
Managing Director at The Mortgage Stop
It's important to compare rates and terms from multiple lenders to secure the best deal. There are several types of mortgages and options available that could help in the current climate. Consider your long-term plans and financial goals when making a decision on your mortgage; if you plan on staying in your home for a long time, a fixed rate loan may provide stability, while an adjustable or variable rate may be more suitable if you expect to move soon. When deciding whether to wait for a variable rate loan or lock in now, consider your personal financial situation and risk tolerance as well as current market conditions. If you're taking out a mortgage for the first time, make sure you understand all costs involved in homeownership such as stamp duty, maintenance, utilities and insurance expenses and try to maximise your deposit.
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Imran Hussain
Director at Harmony Financial Services
There are no correct answers; it's all down to each individual's circumstances and risk appetite with rates starting to lower now, speaking to a professional would be the smartest thing anyone right now should be doing to ensure they have the best mortgage for their circumstances.
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Kylie-Ann Gatecliffe
Director at KAG Financial
For anyone with rates coming to an end within the next six months - a good broker will be your best friend. We start working on our clients options six months ahead to ensure clients have time to make an informed decision. Some opt to secure a rate now, then every week we track rates to ensure that if a cheaper option comes available, we can swap the client to that option. Yes it means more work for us - but it means the client has the cheapest option available to them and we are doing the best we can for the client. For any new borrowers, seeing the headlines you may find the idea of applying for a mortgage pretty daunting - however working closely with a broker will ensure you understand all of your options, know exactly what to budget for, and have someone holding your hand through the process.
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Funmi Olufunwa
Mortgage advisor, Financial Coach & Financial Educator at The Mortgage Mum
The best thing to do is to get organised and speak to a mortgage advisor to see what this means for you. Find out when your rate is ending and they'll help you find out what your options are. Many lenders will let you reserve a rate up to 6 months in advance and may let you change it if a better rate becomes available so if you've got less than 7 months left, start looking at this now. As rates have increased, the rates available to you now will almost certainly be more than your existing mortgage. This means that your monthly payments are likely to go up so now is the time to look at your finances in detail and see where you could be making or saving money e.g. is there any government support that you're missing out on such as the £2000/yr tax free childcare support that nearly 800,000 eligible families aren't claiming.
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Austyn Johnson
Founder at Mortgages For Actors
Don't just hit the next fixed rate on what the current lender is offering you. Proper financial planning is essential this year!
Make sure you have at least, explored the options available to you.
Why waste potentially hundreds of pounds for nothing?!
If rates fall, who is going to win? Fixed rates or variable/trackers?
New borrowers, explore all options too, find a good broker and see what they can do for you. Don't just walk into a bank! Did you know, Halifax is hardly ever the cheapest rate? Yet they are one of the first points of call for a lot of first time borrowers. Look at all of the 120+ lenders out there.
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Stuart Gregory
Director at Lentune Mortgage Consultancy
It's quite simple, there are no correct answers for all Borrowers here. What may be correct and suitable for Hamish or Debbie at the Rugby Club won't be suitable for Henry or Elizabeth at the Golf Club. Each Borrower has individual circumstances which may be factored into the Advice they need to have. Some Borrowers may have disposable income that can be used to 'hold' their position for a few months, other Borrowers will be seeing their payments double, or worse.

The time is for Personalised Advice and not Generalised Guidance.

There may be trouble ahead for many and action is required, preferably six months prior to the end of any current Mortgage Deal.
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Robert Payne
Director at Langley House Mortgages
With most lenders, you can lock in a rate as far as 6 months ahead of your current deal ending, without actually committing to the product until it is due to complete. Therefore it is a good idea to take advantage of this as it puts you in the strongest position by giving protection if rates increase, but if they drop you can cancel that application and reapply for the better option.

The discussion around fixed versus variable rate options will have different outcomes depending on the individual but there is certainly more reason to consider the variable rate deals than there has been for a long time. Naturally, you inherit the risk of rate fluctuations which may be too daunting for some but if you are comfortable with that then there are potentially great savings to be had.
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Jonathan Burridge
Founding Adviser at We Are Money
We are probably back to an interest rate environment that was "normal" pre-credit crunch. That will mean Bank of England base rate will be moving more frequently than it has done for a decade. It is a pure guess where rates will be in six months or a year. I guess is that Base Rate will float between 3 and 4% in a stable market. My expectation is that we will see fixed rates cool down a little more and most will be floating around 4.25-4.50% within a few months. Base Rate will rise again in the foreseeable future. If inflation is reigned in, we may see Base Rate reduce but I don't see that for a year or two. So, taking a two-year fixed rate may hedge your bets, a tracker may look attractive now but it will rise. A longer-term rate would suit someone who is budget-focused, risk-adverse and todays pricing is affordable.
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Graham Cox
Director at Bridging Hub
Variable rate mortgages like trackers and discounts remain a lot cheaper than fixed rates, though the gap is narrowing. My advice would be to speak to a broker well in advance of your current deal expiring, and see what deals are available across the market, rather than just relying on your existing lender. The savings could be huge so it's well worth making the call.
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Gary Boakes
Director at Verve Financial
You need a plan and time. You want to be engaging with a mortgage broker 6-7 months before your rates are due for renewal. The majority of lenders will allow you to change your rate during the 6 months if rates improve, so a good broker will be continually monitoring rates and ensuring that you have the best rate available to you when your existing product ends.

Fixed rate v Tracker will depend on individual circumstances and a good mortgage meeting will determine what is right for the customer. Certainly, the tracker rates are very attractive at the moment, but if this adversely affects your mental health with worry- then is the risk worthwhile?

Mortgage brokers charges can range from free to hundreds, so if you want to save upfront costs, do your research, get recommendations . verve Financial are Fee Free mortgage broker.
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Anil Mistry
Director and Mortgage Broker at RNR Mortgage Solutions
It is crucial that you consult with your mortgage broker six months before your current rate expires. If you do not have a mortgage broker, it is important to find one. A broker will consider your specific circumstances and determine the best course of action for the borrower.

Locking in a rate can be beneficial, as long as it is the most suitable option for the borrower based on their circumstances. If a lower rate becomes available later on, most lenders will allow you to switch to the lower rate without incurring any fees, as long as the mortgage has not been completed. Additionally, as a brokerage, we would not charge to switch to a lower rate if a mortgage has already been offered. Therefore, it is important for the borrower to confirm this with the brokerage in case a lower rate becomes available in the future.
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Gareth Davies
Director at South Coast Mortgage Services
It's simple. Speak to a reputable, non-tied advisor and they will guide you through the best way to tackle things.
A good advisor will monitor the market for you between now and the due date of your current deal, making you aware of changes to the rates and products available. It is very conceivable that if you put an application in now you will end up re-applying for a better product in a few weeks time. Doing this without the benefit of advice from a broker could be costly to you and your credit file.
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Stuart Cheetham
CEO at MPowered Mortgages
"Mortgage rates have fallen faster than initially expected and have now reached a level which we expect will be the new normal. Further reductions will be minimal for the immediate future unless we see another "sizeable" change in the base rate, which we think is unlikely at this stage. We still expect to see a fall in house prices by 5-10% however, the market will stabilise and a house price crash is now looking extremely unlikely. Those remortgaging should speak to a mortgage advisor as everyone's circumstances will be different. With over 100 mortgage lenders in the UK with a broad range of products, making sure borrowers get the right product, at the right rate with the right lender is key. This is best done through an independent whole market mortgage broker."