A letter arrives from your bank: your fixed rate ends soon, and here is the rate you will roll onto. It is tempting to tick the box and move on. A rate expiry is one of the few moments you can restructure a mortgage without cost — it is worth a proper look.
Has your life changed since you last fixed?
Loan structure should follow your circumstances, not the other way around. Since you last fixed, you may have had a change in income, a new child, a plan to sell within a few years, or a lump sum you would like to put toward the loan. Each of these points to a different answer.
Fixed, floating, or split?
- Fixing gives you certainty. Your repayment is locked for the term, which makes budgeting simple, but breaking the fix early can cost you.
- Floating is flexible. You can make lump-sum repayments any time, but the rate is higher and can move.
- Splitting the loan across two or more portions with different terms spreads your exposure, so not all of your mortgage reprices on the same day.
Which term?
A shorter term repriced sooner; a longer term locks certainty for longer. Neither is automatically better. The question is how much predictability you want versus how soon you would like the chance to review again.
Should you change your repayment amount?
When rates fall, banks often reduce your repayment to the new minimum. Keeping your repayment at the old level shortens the loan and saves interest. When rates rise, it is worth checking the new repayment fits your budget before it starts.
The rate on the bank's letter is a starting point, not a limit. At an expiry you can ask about a better rate, a cash contribution for staying, splitting the loan, adding an offset or revolving portion, or moving lenders entirely.
Is it worth moving lenders?
Sometimes another lender offers a sharper rate or a cash contribution large enough to cover the cost of switching. Sometimes staying is clearly better once you account for the effort and any fees. The only way to know is to compare your bank's offer against the market before you accept it.
This article is general information only and not personalised financial advice. Everyone's situation is different — get in touch for guidance specific to you.