There’s speculation that interest rates might fall further this year. So, if your mortgage deal ends soon, you might be hesitant to lock in a new one. Yet, searching for a mortgage now could potentially save you money.

When your existing mortgage ends, you’ll usually be moved on to your lender’s standard variable rate (SVR). This often isn’t competitive, and you could access a lower interest rate by remortgaging.

The Bank of England cut its base interest rate in August

​When inflation was high, the Bank of England (BoE) increased its base interest rate as a way to slow the rising cost of goods and services. This led to the interest rate rising from a historic low of 0.1% to 5.25% in August 2023 through a series of increases. 

For homeowners with a variable- or tracker-rate mortgage, the rising interest rate led to higher mortgage repayments. Those who had a fixed-rate mortgage that ended are also likely to have faced higher outgoings.

The good news for borrowers is that the pace of inflation has slowed. So, in August 2024, the BoE decided to cut the interest rate. There’s speculation that should inflation remain stable, the Bank will cut it further in the coming months. 

If your mortgage deal is due to end soon, you may feel nervous about locking in a new deal now and potentially missing out on further cuts. However, it could still be a beneficial step to take.

You can usually lock in a new mortgage deal up to 6 months before your existing one ends

Usually, you can lock in a new mortgage deal up to six months before your current one ends. This could help you avoid the potentially higher interest rate you’d pay if you moved on to your lender’s SVR.

If you’re worried about locking in a rate and the BoE making further cuts, the good news is that you can usually cancel a deal up to 14 days before it starts. You can check the paperwork a lender will provide you with to ensure this is the case. 

So, if you lock in a new mortgage deal now and the interest rates fall, you can usually switch to a different provider. But if interest rates increased, you could benefit from having a lower rate already locked in. 

As a result, searching for a new mortgage deal before your current one ends could potentially save you money and mean you have plenty of time to assess your options. 

You should note that if you need to pay valuation fees or an arrangement fee for your new mortgage deal, you cannot normally claim these back if you decide to go with a different option. So, you might want to weigh these fees against the potential savings.

A mortgage adviser could help you compare deals

Searching for a new mortgage can be daunting. So, the thought of locking in a deal and keeping an eye on alternative options might not be appealing.

Indeed, according to Moneyfacts, there were more than 6,600 mortgage deals to choose from at the start of June 2024 – the highest number since February 2008. Understanding which deals could be right for you and comparing them can quickly become a time-consuming task.

Working with a mortgage adviser may be useful. As a mortgage adviser, we understand a lender’s criteria, so we can assess which providers are more likely to accept your application and compare options with your needs in mind. It may reduce some of the stress you experience when searching for a new mortgage deal.

We could help you lock in a new mortgage deal up to six months before your existing one ends, and review your options as the date draws near.

Contact us to talk about your mortgage needs

If your mortgage deal will be ending soon, we could help you search for a new one that suits your needs. As a mortgage adviser, we could offer support throughout the process and potentially save you money. Please get in touch to speak to one of our team.

Please note:

This blog is for general information only and does not constitute advice. The information is aimed at retail clients only.

Your home may be repossessed if you do not keep up repayments on a mortgage or other loans secured on it.

Approver Quilter Financial Services Limited & Quilter Mortgage Planning Limited. 04/09/2024