My Fixed Rate Is Coming To An End...

Tayus

Hi Guys,

I currently have my mortgage with Abbey and my fixed rate is due to end in the next few months and I will be moving over to the standard variable rate.

I will be happy to stick with the SVR for a while to see what happens with the interest rates of other providers however my question is what do I need to do when my fixed rate ends?

The SVR rate is lower than my current rate so in theory my monthly payments will drop wont they? however I want to start paying more off my mortgage than the minimum required so I am considering increasing my payments when my fixed rate ends anyway.

Is there a maximum you can pay off when you move onto the SVR or can you pay off as much as you like each month without incurring any penalties?

Thanks for reading!

StuartGMC

Tayus
You'll need to check your T&C and contact the lender for the limits and mode of overpayments. The "easiest" way to OP is simply never reduce your payment when rates drop and as the remaining capital drops; you've lived with this as an outgoing expense so you can continue to do so without feeling it.

Of course, if you find you can OP more (in consideration of a balance portfolio of pension, savings for rainy day, savings for planned purchases etc) then you consider doing so if the return is better than you can obtain via savings. That said, many of us here (because we focus on paying down the debt rapidly) will tend to OP if the saving only marginally improves the money at year end, or, you can move to offsetting if it is suitable.

Contact your lender to discuss what you wish to do, but be certain you have reviewed your budget in detail; there is no point OP then finding you need a car loan for example at short notice which would wipe out the savings made on the (lower interest) mortgage!

Best wishes on your plans

pixiepie99

Normally, when you come off the fixed rate and onto the SVR, there is no limit on how much you can overpay. I strongly suggest you double check your key facts doc or ask your lender to double check though.

If you can overpay as much as you want without charges (as I assume you will be able) you could pay off a lump sum as soon as your fixed deal ends. If you want to overpay by the same amount each month you can probably just get them to increase your direct debit.

But technically, you don't have to 'do' anything when your fixed rate ends. Your lender with automatically switch you onto the SVR and write to you to confirm your interest rate and monthly payments. You only have to 'do' something if you want to overpay.

Hope that helps.

jill2002

Hi,

If you want to continue at your current monthly payment - just ask them to reduce your term (assuming you are on a repayment mortgage). There is no charge to do this. However, if you are on Interest Only, your only option would be to pay a lump sum (minimum £500) whenever you like - until you take a new deal. The maximum is the amount of your mortgage !! i.e. there is no maximum as you are not tied into a deal.

Dithering_Dad

Hi, welcome to the MFW board!

Usually when you go onto the SVR, any redemption policies have expired (but as other posters have mentioned, ring your provider or check your T&C's). If you have no redemption policy in place, then you are entilted to overpay as much as you like without penalities - you can even pay off the entire mortage.

As far as the future is concerned, my own view is that we will have low rates for about a further 12 months or more and then we might see inflation starting to creep up. My own prediction is that we will see 8% interest rates in a couple of years.

My own mortgage goes onto its SVR in April next year and I'll be looking to secure a 5 year low interest fix for that period (and hopefully I'll be able to overpay and further reduce my mortgage in that time).

Good luck with your overpayments and in getting that Mortgage Monkey off your back