What happens when your fixed-rate mortgage runs out?
You will usually be moved by your lender on to their 'standard variable rate' (SVR) mortgage. This means if the interest rate changes your mortgage payments can go up or down each month. The interest rates are often higher for SVRs than for fixed rate mortgages.
Can I extend my mortgage term? Yes you can, and changing your term won't affect your monthly payments. However, the term can be changed to coincide with the maturity of your repayment plan. Speak to one of our Mortgage Advisers to discuss your options.
When your fixed rate period ends, your home loan will automatically roll onto a variable rate, unless you arrange to re-fix your loan ahead of your fixed rate expiring. We'll send you written notice before your fixed rate period ends to let you know the details of your home loan.
This is called the mortgage term and it can range from a few months to five years or longer. You have to renew your mortgage at the end of each term unless you pay the balance in full. You'll most likely require multiple terms to repay your mortgage in full.
Most mortgage lenders allow you to apply for a product transfer up to 6 months before your current deal ends (or at any time if you're already paying your bank's SVR - Standard Variable Rate). So, you can get a quote today (either fixed or tracker) and have up to 6 months to decide whether to take it.
As your fixed term comes to an end, you essentially have two options: either revert to your lender's standard variable rate (SVR) or remortgage with a new fixed or variable deal. If you switch to your existing lender's SVR, monthly repayments can fluctuate in line with the Bank of England's base rate (BoE).
It is possible to refinance a fixed-rate mortgage. However, when you entered into the fixed-term, you signed a contract agreeing on the period of time the loan would be fixed. Refinancing the loan means you're breaking this contract and as a result, the lender will require compensation for any loss.
There are four main factors that can affect a mortgage payment: escrow account, property taxes, homeowners insurance and interest rate. Members of the armed forces may also see a rise in mortgage payments when they come off active duty.
While it's difficult to predict how interest rates will change, in December 2023, the Fed predicted it would lower the federal funds rate to 4.6% by the end of 2024.
Mortgage rates are expected to decline later this year as the U.S. economy weakens, inflation slows and the Federal Reserve cuts interest rates. The 30-year fixed mortgage rate is expected to fall to the mid- to low-6% range through the end of 2024, potentially dipping into high-5% territory by early 2025.
Can I renegotiate my mortgage?
Talk to your lender if you do renegotiate the price down, because the change will affect your mortgage offer. Your lender will want to reassess what they've offered you. Unless there's been a significant change since the mortgage offer, amending it could be a straightforward process.
Can I Move House During My Fixed-rate Mortgage Period? You usually can move house during your fixed-rate period providing you can afford any fees involved. But whether you should or not, and if you do, whether you should move your existing mortgage or take out a new one, are different questions.
Yes, you can negotiate mortgage rates with your current lender. For example, you can ask your mortgage company for a lower rate, but there's no guarantee you'll get one.
If you're nearing renewal at a time when interest rates are lower than your current rate, you might want to take advantage by renewing early. Securing a lower rate will effectively lower your monthly mortgage payment – and it could save you money.
In many cases your mortgage will automatically renew. Automatic renewal often comes with open terms which means you can leave at any time without penalty, but the interest rate is often higher, which can cost you a lot in the meantime.
The main advantage of a fixed rate home loan is certainty. You can lock in or 'fix' your interest rate for a certain period of time – typically between one and five years – and plan for the future, knowing that your repayments will stay the same during that time.
Forecasters believe mortgage rates may fall further in 2024, meaning it may be wise to opt for a variable rate or tracker mortgage for the time being, and fixing your mortgage once rates do slide. For a more accurate steer, it's a good idea to engage a mortgage advisor when you're ready to choose a mortgage.
Here's where three experts predict mortgage rates are heading: Around 6% or below by Q1 2025: "Rates hit 8% towards the end of last year, and right now we are seeing rates closer to 6.875%," says Haymore. "By the first quarter of 2025, mortgage rates could potentially fall below the 6% threshold, or maybe even lower."
Mortgage rates can vary greatly depending on the type of loan, the lender, and the current market conditions. You'll likely see increases in mortgage payments in 2024 – whether you're refinancing to a new deal or defaulting to your bank's standard variable rate (SVR) - because interest rates have gone up.
Can you switch your mortgage to another bank? Yes, it is typically possible to switch a mortgage to another lender. Switching or refinancing your current home loan part-way through the loan term to another loan that better suits your needs could potentially save you money.
Can you change a fixed-rate mortgage to interest only?
If your lender agrees, you can often change your repayment mortgage to an interest-only mortgage. To initiate this switch, reaching out to your lender is the first step.
- Recast your mortgage. If your lender is willing, you might be able to recast your mortgage. ...
- Cancel mortgage insurance. ...
- Request mortgage forbearance or a loan modification. ...
- Make biweekly mortgage payments. ...
- Adjust your homeowners insurance or property tax. ...
- Bottom line.
The average mortgage payment is $2,883 on 30-year fixed mortgage, and $3,759 on a 15-year fixed mortgage. But the median payment is likely a more accurate measure for many: $1,775 in 2022, according to the US Census Bureau.
It's common to see monthly mortgage payments fluctuate throughout the life of your loan due to changes in your home value, taxes or insurance.
Since your interest is calculated on your remaining loan balance, making additional principal payments every month will significantly reduce your interest payments over the life of the loan. By paying more principal each month, you incrementally lower the principal balance and interest charged on it.
