Put a reminder in for six months before your fix ends

A fixed rate is a promise about a number of months. When it ends you do not get a letter that says “you are about to start paying an extra £485 a month”. You get a letter that mentions the standard variable rate somewhere on page two.

What actually happens

Take a £250,000 balance with twenty years left. On a 4.09% fix the payment is about £1,527 a month. If the fix ends and the loan drifts onto a 7.49% variable rate, the payment jumps to about £2,012. Nothing about the house, the borrower or the loan has changed. The variable rate is simply the price of not having decided anything.

The six-month window

Most lenders will let you reserve a new product up to six months before your current one ends, and most will let you swap it again if rates fall in the meantime. So there is very little reason not to look early, and one expensive reason not to look late.

Practically:

• Find the end date on your offer letter, not on your memory of it.
• Put a reminder in for six months and one week before it.
• Check the early repayment charge. It usually falls away in the last month or two of the fix, and occasionally it does not.

What we do about it

We keep the end date of every deal we arrange and we come back to you six months out, whether or not you asked us to. It costs us a phone call and it is the most useful thing a broker does after completion. If you arranged your last mortgage elsewhere, send us the end date and we will do the same.