Remortgaging After Fixed-Term Ends: Avoiding the SVR Trap

As a homeowner, you've likely been enjoying the stability of your fixed-rate mortgage. But what happens when that fixed term comes to an end? If you're not prepared, you could fall into the SVR trap – a situation that could cost you thousands of pounds each year. Let's explore what this means and how you can avoid it.

What is SVR?
SVR stands for Standard Variable Rate. It's the default interest rate your mortgage will revert to once your fixed-term deal expires. SVRs are typically higher than the rates offered on fixed-term deals, which means your monthly payments could increase significantly.

The SVR Trap
Many homeowners find themselves caught off guard when their fixed term ends. If you don't take action, your mortgage will automatically switch to the lender's SVR. This can lead to a sharp increase in your monthly payments. For example, if you're currently paying £800 per month on a £200,000 mortgage, switching to an SVR could see your payments jump to £1,000 or more – that's an extra £2,400 per year!

Timing is Everything
To avoid falling into the SVR trap, it's crucial to start planning 3-6 months before your fixed term ends. This gives you ample time to explore your options and complete the remortgaging process if necessary.

Preparing to Remortgage

Before you start looking at new deals, take these steps:

1. Review your current mortgage terms
2. Check your credit score and take steps to improve it if needed
3. Gather necessary documents (proof of income, bank statements, etc.)

Your Remortgaging Options

1. Stay with your current lender: This is called a product transfer and can often be the simplest option.
2. Switch to a new lender: This might offer better rates but requires a full application process.
3. Choose between fixed, variable, or tracker rates: Each has its pros and cons depending on your circumstances and the current economic climate.

Potential Savings
The difference between an SVR and a new fixed-rate deal can be substantial. For instance, on a £200,000 mortgage, the difference between a 5.5% SVR and a 3.5% fixed rate could save you about £4,000 per year. That's a holiday abroad or a significant boost to your savings!

Challenges to Be Aware Of
When remortgaging, be prepared for:

• Changes in your personal circumstances (income, employment status)
• Fluctuations in your property value
• Potentially stricter lending criteria compared to when you first got your mortgage

What If You Can't Remortgage?

If remortgaging isn't possible due to changes in your circumstances, don't panic. Speak with me to discuss what options are available with your current lender.

The Remortgaging Process

1. Start researching options 3-6 months before your fixed term ends
2. Speak with me about your current lender and compare their offers with others in the market
3. If switching lenders, submit your application and required documents
4. Get your property valued
5. Receive and accept your mortgage offer
6. Complete the legal work (usually handled by a solicitor)
7. Complete the remortgage

Remember, the key is to be proactive. By planning ahead, you can avoid the SVR trap and potentially save thousands of pounds.
Don't Navigate This Alone
Remortgaging can seem complex, but you don't have to figure it out by yourself. Our team of experienced mortgage advisors is here to help you find the best deal for your circumstances.
Get in touch today for free, no-obligation advice. You can reach us through our website at Contact Us or email us directly at [email protected].
Take control of your mortgage today and keep more money in your pocket!

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