You know what it’s like, you spend hours sorting out your mortgage, and weeks waiting for it to come through. However, once you have the mortgage in place how often do you review it? Those who are conscientious will probably have a note in their diary, if you used a broker you can guarantee they will be in touch when your introductory rate ends or you could always rely on the lender to let you know.

What happens at the end of your introductory rate?

If you don’t do anything at the end of your introductory rate you will go onto the lenders standard variable rate. This is a rate set by the lender, which tends to follow changes in the base rate. That being said, unless it is directly linked to the base rate the lender could choose to change their standard variable rate at any time and by any amount.

Is it bad to be on the Standard Variable Rate?

That depends on your circumstances, a recent study by L&C has estimated that more than 4 million households are wasting on average £216 per month by staying on their lenders standard variable rate. If you are one of these 4 million then it would suggest that for you, it is a bad thing to be on the Standard Variable rate.[1]

If your mortgage amount is quite low and has a relatively short period of time then it may be best to stay on the standard variable rate and changing your mortgage may not be cost effective if there are fees involved.

What are the options?

There are a number of options open to you once your introductory rate has ended, although it is important to note that some of these options can take a while to put in place so it is best to review your mortgage a few months before your rate actually ends.

  • Remortgage – move your mortgage to a new lender. This gives you the opportunity to search the mortgage market for the best deal. It also gives you an opportunity to make changes to the mortgage such as borrowing more for home improvements or changing the mortgage term to pay it off quicker.
  • Product Switch – keep your mortgage with your current lender but ‘switch’ on to a new product with them which will generally offer you a better rate than staying on the standard variable rate.
  • Do Nothing – In some cases this can be the right option depending on your circumstances.

However, according to the Citizens Advice bureau 83% of people currently on the standard variable rate would be better off if they switched to a new deal![2]

To find out if you could save on your current mortgage please contact me at clare@stoneygate-mortgages.co.uk

Sourcing – [1] https://www.landc.co.uk/insight/2017/03/are-you-paying-more-than-you-need-to-for-your-mortgage/
Sourcing – [2]http://www.dailymail.co.uk/money/mortgageshome/article-4735128/Are-stung-mortgage-loyalty-penalty.ht
YOUR HOME MAY BE REPOSSESSED IF YOU DO NOT KEEP UP REPAYMENTS ON YOUR MORTGAGE. For mortgage advice our broker fee is £195 which will be payable on application. Stoneygate Mortgages Ltd, registered in England at 19 Warren Park Way, Enderby, Leicester, LE19 4SA (Company Number 10689309). Stoneygate Mortgages Ltd is an appointed representative of First Complete Ltd, which is authorised and regulated by the Financial Conduct Authority (FRN: 435779) for mortgage and non-investment insurance advice. The Financial Conduct Authority does not regulate some forms of Buy to Let.
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