What happens on the day your fixed-rate mortgage deal ends

Most residential mortgages in the UK start with an introductory deal: a fixed rate for two, three or five years, sometimes longer. The mortgage itself usually runs for 20 or 25 years or more, so the deal is only a chapter. When it finishes, the mortgage carries on. What changes is the interest rate, and with it the monthly payment.

Nothing dramatic happens on the day the fixed rate ends. There is no deadline to sign anything and no penalty for doing nothing. That is exactly why it is easy to overlook.

The reversion rate

If you have not arranged anything else, the mortgage moves to the lender’s reversion rate. The Financial Conduct Authority explains that this is the rate you pay when your initial fixed or discounted rate ends, that it is often the lender’s standard variable rate (SVR), and that it will typically be higher than the fixed rate you were paying. An SVR is set by the lender and is not directly tied to the Bank of England base rate, so it can change at any time.

The Financial Ombudsman Service describes fixed-rate mortgages the same way: you pay the same rate for an agreed number of years before going back to the lender’s SVR or, if you choose, remortgaging.

Capital-and-interest repayment calculated monthly. The rates are invented for illustration; real fixed rates and SVRs vary by lender and over time.

Two ways to arrange a new deal

A product transfer means moving to a new deal with your existing lender. It is usually quicker and involves less paperwork, because the lender already holds the loan. Under the Mortgage Charter, signed by most large lenders in 2023, customers who are up to date with their payments are supported to switch to a new deal at the end of a fixed rate without another affordability check.

A remortgage means moving the loan to a different lender. It opens up the whole market, which can matter if your existing lender’s rates are not competitive, but it usually involves a full application, an affordability assessment, a valuation and legal work. Some lenders offer free valuations or legal fees on remortgages; others charge arrangement fees that can be added to the loan.

A mortgage broker can compare both. Some charge a fee; others are paid by the lender. Either way, they should explain how they are paid before they start.

Doing the sums

An arrangement fee of £999 on a new fixed deal can be cheaper or dearer than a fee-free deal at a slightly higher rate. On the £150,000 example above, a rate 0.25 percentage points lower saves about £20 a month, or roughly £480 over two years. Over a two-year deal that would not cover a £999 fee; over five years (around £1,200) it would. Always compare the total cost over the length of the deal, fees included. Illustrative figures.

When to start

Lenders that signed the Mortgage Charter agreed to give customers approaching the end of a fixed rate the chance to lock in a new deal up to six months ahead, and to let them ask for a better like-for-like deal with the same lender right up until the new term starts, if one is available. The Ombudsman’s guidance puts it simply: if you are coming to the end of a fixed rate period, your lender can offer a new rate up to six months before the old one expires, and you can change your mind if rates go down.

The FCA adds that a mortgage offer from a new lender normally stands for between three and six months. Starting around six months before the end date therefore gives time to compare, apply and complete without spending any months on the reversion rate.

Early repayment charges and the end date

Most fixed deals carry an early repayment charge if you leave or overpay beyond an allowance before the deal ends. The charge normally stops on the end date, which is why a new deal, whether with the same lender or a new one, is usually timed to start the day after. Your mortgage offer or annual statement shows the exact date.

Who this matters for, and what to check

• Anyone whose deal ends in the next six to nine months: find the end date, the early repayment charge and the lender’s current reversion rate.
• Households whose income has changed since the last deal, for example after retirement or reduced hours: the Charter’s product-transfer support is designed for customers who are up to date with payments.
• Borrowers nearing retirement, who may want to think about the remaining term alongside the rate.
• Anyone planning to remortgage: a look at your credit files a few months beforehand avoids surprises.

If payments are already difficult, the FCA’s advice is to contact the lender as soon as possible. Lenders must treat customers fairly and can offer options such as extending the term or a temporary switch to interest-only payments. Under the Charter, talking to your lender about these options does not affect your credit file.

The short version

When a fixed rate ends, the mortgage moves to the lender’s reversion rate, often its SVR, which is typically higher. A product transfer with your current lender is usually simpler; a remortgage widens the choice but takes longer. Lenders under the Mortgage Charter let you secure a new deal up to six months early, so a note in the diary half a year before the end date is the most useful step of all. For homeowners later in life weighing other ways to use a property, we also explain how a lifetime mortgage works.