HOMEOWNERS might need to lock in to a new mortgage deal NOW if they want to avoid their monthly payments increasing over Christmas.
If your fixed-rate deal is due to end in December or January, you’ve only got days left to find yourself a new deal.
That’s because moving on to a new mortgage lender takes roughly six to eight weeks on average.
If you apply for a new deal too late, you risk rolling onto your lender’s costly standard variable rate (SVR) mortgage just as Christmas arrives.
Solicitors can also face backlogs as homeowners rush to lock in deals before the big day.
That means you should aim to choose a new deal by no later than mid-November.
Fixed-rate mortgages last for a set period of time and the interest rate will stay the same.
But once the fixed period ends, if you haven’t locked into a new deal then you will be automatically moved onto your lender’s SVR.
SVRs typically have much higher mortgage rates than fixed-rate deals.
For example, the typical two-year fixed deal currently has a mortgage rate of 5.97%.
Meanwhile, the average standard variable rate is 7.13%.
If you had a £200,000 mortgage with a 25-year term, you’d pay £1,285 a month with a mortgage rate of 5.97%.
But if you got moved onto the average SVR deal, you’d be paying £1,430 – which is £145 more.
The extra cost could be particularly difficult to stomach over Christmas, when many people already have squeezed budgets.
Over the course of a year, that would cost you £1,740 extra.
If you’re coming up to remortgage, you should ideally start looking for a new deal around six months in advance.
And especially if you want to lock in before Christmas, the clock is ticking.
Remember, if you find a cheaper deal once you’ve already locked in, you can usually switch onto the cheaper option as long as your mortgage hasn’t completed yet.
If you’re running out of time, another option could be to switch onto a deal with your existing lender.
This usually takes only two to three weeks because it doesn’t involve the same level of checks.
However, make sure you’re happy with the mortgage rate you will be getting and compare with other deals first.
