Switching to or From a Fixed-Rate Mortgage

Whether you’ve reached the end of your fixed-rate mortgage term or not, there may come a time when you want to switch to a new deal. Switching to (or from) a fixed-rate mortgage is certainly possible, but there are various implications you should be aware of.

This guide will tell you everything you need to know about switching mortgage types so there are no surprises later on. 

Can you change a fixed-rate mortgage to another product type?

Yes, you can. This will essentially be classed as remortgaging because you’re using a new mortgage deal to pay off your current one, but you should bear in mind that it will be easier to switch if you’re coming to the end of your fixed rate term.

This is because when you signed up to your mortgage deal, you agreed to stick with your current provider and chosen mortgage until the fixed rate agreement comes to an end, which means switching when you’re in the middle of the term could be more problematic. But that doesn’t mean it’s impossible – it’ll just come with additional implications, most notably to do with exit fees.

It’s essential to speak to an expert mortgage broker who’ll be able to take you through your options, but there’s one key choice you’ll have to make – whether you want to switch to a variable rate deal, or take another fixed rate.

Switching to a tracker or variable rate deal

If you’ve come to the end of your fixed rate term, switching to a variable rate deal could be as simple as letting your mortgage revert to your lender’s standard variable rate (SVR). However, this isn’t normally recommended as SVRs tend to come with far higher interest rates than alternative product types, so it’s always wise to compare your options and find a rate that’s better suited.

This could be from the lender you’re currently with or from an entirely new provider – the choice is yours. If you’re not tied into a fixed rate contract you’re completely free to change provider as you see fit, though if you’re in the middle of your term remember that it could be more challenging to get out.

Bear in mind too that switching to a tracker or variable rate deal means that your mortgage payments could fluctuate, so make sure to factor that into your decision-making.

Switching to another fixed-rate agreement

Changing to another fixed rate mortgage will again be simpler if you’re coming to the end of your term – you’ll just need to compare the options before your mortgage expires, sign a new agreement, and you’ll be switched over when your current fixed term ends to avoid reverting to an SVR. If you’re switching mid-term, be prepared to jump through a few more hoops.

You can again choose between sticking with your current lender or looking elsewhere, though bear in mind that the application process will often be simpler if you’re remortgaging with your current provider, as they may simply need to confirm your circumstances haven’t changed rather than go through a full application (though you’ll still need to pass their criteria and will be subject to a fresh credit check).

Can you switch from a tracker or variable mortgage to a fixed rate?

Yes. Changing your mortgage from a variable to a fixed-rate deal is arguably a more popular option when mortgage rates are in flux, as you can benefit from the guaranteed mortgage payments that a fixed rate can offer.

Switching from a variable rate can often be easier too, at least if you’re on a lender’s SVR – in this case you’re not normally tied in to such an extent and won’t have any fees to pay if you want to move. Though if you’re still in an initial tracker or variable rate deal, you may still be charged exit fees to switch.

How a broker can help you choose the right mortgage type

Speaking to a broker will always be invaluable in any mortgage search, but particularly if you’re considering switching your mortgage type.

They’ll start by talking through your situation to fully understand your circumstances, taking note of everything from your employment and marital status to future plans (for example, are you or your partner considering changing jobs or going on maternity leave in the near future?), and from there will be able to advise on the best type of mortgage to suit.

Specifically, they can help you decide whether a fixed or variable rate mortgage would be most suitable, taking account of your budgeting requirements and your need for certainty over your desire for flexibility. They’ll also be able to help you understand how to change from a variable to a fixed mortgage rate – or vice versa – and crucially, will take you through the process while identifying the lenders to accommodate your requirements.

See how beneficial they can be by making an enquiry today.

The implications of switching

The key reason borrowers look to change to or from a fixed-rate mortgage is to secure a better mortgage rate, but it isn’t always that simple.

There are always additional factors to consider before you make the switch, including:

Fees

We’ve touched on this before, but if you’re in the middle of a fixed-rate term (or even an initial variable rate) and want to switch to a new deal, you’ll likely be charged an exit fee as well as an early repayment charge (ERC), as you’re essentially breaking your contract and paying off the mortgage early. This is why it’s vital to make sure that switching really will be beneficial, as in many cases, the fees charged could outweigh any financial benefits of switching.

You’ll also need to pay the usual fees associated with applying for a new mortgage deal, including potential arrangement or booking fees, legal fees and valuation fees. These will always need to be factored into your calculations to determine if it’s best to switch or stay put.

Contract

This can be particularly important to consider if you’re looking to switch to a new provider, as you’ll need to sign a new contract with your chosen lender and therefore need to be confident that you’ve chosen wisely, both in terms of the rate you’re getting and the terms you’re abiding by. This can be even more important if you think your circumstances may change. This is why speaking to a broker can be so beneficial, as they’ll know the lenders who could be perfect for your needs.

Changing mortgage payments

This only applies if you’re thinking of switching from a fixed to a variable rate deal, but if that’s the case, remember that variable rate mortgages are exactly as they sound – the rate has the potential to change in-line with wider market fluctuations or lender decision-making, which means your mortgage payments could change accordingly.

For some this may not be too much of a concern – particularly if they’ve got a smaller mortgage balance – but if you like to be in control of your budget and want repayment certainty, switching to a variable rate deal could be more challenging.

Get matched with the right mortgage broker

There’s a lot to think about when it comes to switching mortgage type, but having the right broker by your side can make the process far less stressful. That’s where we come in.

We have a network of advisors who specialise in mortgage switching and our unique broker matching service will help you find one who’s perfect for your needs – all you need to do is tell us a few details by making an enquiry or calling us on 0808 189 0463 and we’ll do the rest. It’s completely free to have us match you with the right broker, there’s no obligation, and you can rest assured you’ll have the expertise necessary.