On ITV’s Lorraine this morning, finance expert Claer Barrett answered listener questions on how they can survive the cost of living crisis and rising bills. With interest rates rising at the fastest rate in 20 years and mortgage rates rising even faster, many people are worried what will happen when their fixed mortgage term comes to an end.
Ms Barrett urged a listener to plan ahead to avoid falling on the lender’s Standard Variable Rate.
Michelle emailed the show explaining that her mortgage is set to end its fixed term in January.
She wasn’t sure if she should remortgage early or wait and see what happens.
Ms Barrett said: “You can start to remortgage now – six or seven months before your rate expires.
“It’s possible to lock in a rate with a new lender about four months before your deal expires.
“You’ll be able to lock in rate with your existing mortgage lender but they might not give you as competitive as a deal.”
She offered suggestion as to what Britons in a similar situation can do to save money.
Ms Barrett continued: “But my advice to Michelle and others is be aware that mortgage lenders and brokers are super busy.
“But rates could go down in the future if we get a recession.”
She warned: “You don’t want to fall off your existing rate onto the lender’s SVR – Standard Variable Rate. That could be five or six percent and add hundreds to your monthly bills until you can sort out the remortgage so plan ahead.”
The Bank of England has issued another base interest rate hike this month, taking it to a staggering 1.75 percent – sending mortgage rates soaring higher.
With mortgage rates on the rise, it can be detrimental to leave new fixes to the last minute.
Claire Flynn, mortgage expert at money.co.uk warned Britons: “Remortgaging before your current deal ends could mean you’ll need to pay an early repayment charge (ERC).
“You should compare the cost of the ERC to how much you think you could save by remortgaging, to ensure that switching early is worthwhile.”
She continued: “Although, most mortgage deals in the UK are valid for six months so if your current deal is set to expire within the next few months, you could apply to remortgage early.
“This allows you to secure a rate and switch when your deal comes to an end, avoiding an ERC.”
Lorraine continues tomorrow on ITV at 9am.