Can I switch lenders after my fixed term ends?

You absolutely can switch lenders after your fixed term ends. When your initial fixed rate period expires, you typically move onto the lender’s Standard Variable Rate (SVR), which is often significantly higher. This period marks the ideal time to shop around for a new, more competitive deal, a process known as remortgaging. This decision allows you to secure a better rate and manage your monthly payments more effectively, provided you meet the new lender’s eligibility criteria.

Can I Switch Lenders After My Fixed Term Ends? Your Complete Guide to UK Remortgaging

For most UK homeowners, the fixed-term mortgage is the backbone of their household budget. These terms—often lasting two, three, or five years—provide financial certainty by guaranteeing a specific interest rate. When this period concludes, you face a crucial decision: stay with your current provider or switch lenders entirely.

The short answer is yes, you can and often should explore switching lenders after your fixed term expires. Doing so ensures you avoid automatically rolling onto the lender’s Standard Variable Rate (SVR). The SVR is generally the most expensive interest rate offered by a lender, making the transition period the perfect time to find a new, cheaper deal.

Understanding Your Options When Your Deal Ends

When your fixed rate period is nearing its end, generally within the last six months, you have two primary routes:

• Product Transfer: Staying with your current lender but switching to a new deal they offer (a new fixed rate, tracker, or variable rate).
• Remortgaging (Switching Lenders): Moving your mortgage debt entirely to a new provider who offers a more competitive rate or better terms.

While a product transfer is often simpler and quicker, remortgaging offers the opportunity to access the entire market, which could result in greater long-term savings.

The Advantages of Switching Lenders

Switching lenders, or remortgaging, involves a bit more administrative effort than a product transfer, but the benefits can be substantial.

1. Lower Interest Rates

The main driver for switching is securing a better interest rate. The new lender may be able to offer a rate significantly lower than both your current SVR and the new product transfer deals offered by your existing provider.

2. Access to Better Terms or Features

Different lenders specialise in different products. Switching might allow you access to features that better suit your current financial situation, such as:

• Mortgages with generous overpayment limits.
• Deals that allow you to take a payment holiday (subject to terms).
• Access to deals specifically designed for those looking to release equity for home improvements or other large purchases.

3. Avoiding Early Repayment Charges (ERCs)

The primary benefit of waiting until your fixed term is over is the avoidance of Early Repayment Charges (ERCs). These fees can be substantial (often 1% to 5% of the outstanding loan) if you leave before the fixed period ends. Once your term expires, you are usually free to leave without this penalty.

The Remortgaging Process: Key Steps for Switching

Switching lenders is essentially applying for a brand-new mortgage, secured against your existing property. It involves several key stages:

Step 1: Review Your Finances and Affordability

Before approaching new lenders, assess your current financial stability. Lenders will rigorously check that you can afford the new loan, especially considering changes in interest rates since you took out your original mortgage. They will look at your income, existing debts, and household expenditures.

Lenders must ensure that the borrowing remains responsible. If your circumstances have changed significantly—for example, if your income has dropped or your outstanding debt has risen—you might find it harder to switch, even if you currently manage your existing payments successfully. Remember: Your property may be at risk if repayments are not made. Legal action, repossession, increased interest rates, and additional charges are possible consequences of default.

Step 2: Check Your Credit Profile

Your credit score is crucial. New lenders will run a hard credit search to assess your repayment history and reliability. Ensuring your report is accurate and up-to-date is vital before applying. A high score increases your chances of securing the most favourable rates.

If you haven’t checked your report recently, it is highly recommended. Get your free credit search here. It’s free for 30 days and costs £14.99 per month thereafter if you don’t cancel it. You can cancel at anytime. (Ad)

Step 3: Property Valuation

The new lender will require a valuation of your property to confirm its current market worth and establish the Loan-to-Value (LTV) ratio. The LTV is critical, as better interest rates are typically offered to applicants with lower LTVs (i.e., higher levels of equity in the property).

If property values in your area have risen significantly, your LTV may have improved since you first bought the home, potentially qualifying you for a significantly better tier of mortgage products.

Step 4: Submitting the Application and Legal Work

Once you select a new deal, you submit a formal application. This is followed by the conveyancing process, handled by solicitors (often provided or subsidised by the new lender). The solicitor ensures the legal transfer of the charge (the lender’s right over the property) from the old provider to the new one. Once all checks are complete, the new lender releases the funds to pay off the outstanding balance on your old mortgage.

Considering the Costs of Switching Lenders

While the goal of switching is to save money long-term, you must account for immediate costs and fees. These may include:

• Arrangement/Product Fees: A charge for setting up the new mortgage product. These can range from a few hundred pounds to over £1,500. You typically have the option to pay this upfront or add it to the loan, although adding it means paying interest on the fee.
• Legal Fees (Conveyancing): Costs associated with the solicitor handling the transfer of the mortgage charge. Many lenders offer free legal packages or cashbacks to cover this cost, but check the terms carefully.
• Valuation Fees: The cost of the property valuation. Again, many competitive deals offer a free valuation.
• Exit Fees (or Deeds Release Fees): Although you avoid the main ERCs, some old lenders charge a small administrative fee (usually £50–£100) to close your account and release the deeds.

Always perform a careful comparison that balances the new interest rate against the total cost of the fees. A slightly higher rate with lower or no fees might be cheaper overall if you plan to move again soon.

When Should I Start the Process?

You should start investigating new deals approximately six months before your fixed term ends. Most lenders will allow you to secure a rate (a ‘mortgage offer’) that is valid for three to six months. This lead time gives you adequate space to complete the application, undergo the necessary checks, and ensure the new loan completes exactly when your current fixed term expires, thereby eliminating any time spent on the costly SVR.

For further impartial advice on remortgaging, the government-backed MoneyHelper service provides excellent resources: MoneyHelper: Switching Mortgage Deals.

People also asked

How much notice do I need to give my current lender before switching?

You generally do not need to give formal notice that you intend to switch lenders, only that you will be redeeming (paying off) the mortgage. However, it is courteous and helpful to communicate your plans to your current provider, and you should ensure you understand any final administrative or exit fees they may charge.

Will switching lenders affect my credit score?

The initial checks performed by a broker or lender (A soft search) will not affect your score. However, once you submit a formal application, the chosen lender performs a hard credit search, which leaves a footprint on your report. Multiple hard searches in a short period could potentially lower your score, so it is best to be confident in your choice before submitting multiple final applications.

Is a product transfer always easier than remortgaging?

A product transfer is typically faster and easier because you stay with the same lender, avoiding the need for new solicitors, fresh valuation surveys, and rigorous new affordability assessments. However, it may mean missing out on a better overall rate available across the wider market.

What if I have an adverse credit history now?

If your credit history has worsened since you took out your original loan, switching lenders might be challenging, as the new provider must adhere to current, strict affordability regulations. In such cases, your best option may be to pursue a product transfer with your existing lender, who may be more lenient as you already have a proven repayment record with them.

Can I switch lenders if I want to borrow more money?

Yes, many people use the remortgaging process as an opportunity to release equity (borrow more money) for purposes like home improvements. You must pass the new lender’s affordability checks for the higher total loan amount, and the maximum borrowing will still be constrained by the property’s LTV ratio.

Conclusion

Switching lenders after your fixed term ends is a smart financial move that should be proactively planned. By understanding the remortgaging process—which involves reassessing affordability, checking your credit, and accounting for fees—you can secure a new, competitive interest rate and ensure your mortgage remains structured in the most cost-effective way for your future financial goals.