When you’re approaching the end of your mortgage deal (for example, a discounted or fixed rate of interest), the general advice is to find a new deal as soon as possible.
This is so that you can avoid your lender’s “Standard Variable Rate” (SVR) – which is basically the lender’s default mortgage rate, which is usually a couple of percent above the Bank of England base rate, and tracks it up and down.
However, with interest rates currently lower than they’ve been in decades, the SVR shouldn’t now be ruled out as an option, at least in the short term.
In many cases, the SVR is close to the best deal available with a lender. Many have withdrawn their tracker rates (they’re looking to protect themselves as interest rates are expected to come down even further), and where they remain, in some cases their SVR rates are lower than the rates on the tracker mortgages.
For example, Nationwide’s SVR is 4.69%, but their tracker rates are closer to 5%. Other lenders’ SVRs are more like 5%- 5.5% per cent – still low when compared with a few years ago. Plus, new deals tend to have large arrangement fees, so this is another reason to weigh up the pros and cons of staying on the SVR.
As ever, in these situations where there is no clear best route to take, you should get some professional advice, and if your mortgage deal is ending, your first option should be to talk to an independent mortgage advisor.