What should I be doing now if my current mortgage rate ends in 2024?

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What should I be doing now if my current mortgage rate ends in 2024?

I’d suggest there are two main things you can focus on in readiness for your rate expiry:

·???????? Preparation / Tidying Up your finances

·???????? Securing your New Rate

Your rate and monthly payment are likely to be going up, with research suggesting* that the average increase for those of you with a rate expiring between Aug 23 and Jul 24 is c￡288 per month!

Preparation

·???????? Review your spending – look at your last 3 months bank statements (All accounts if you have multiple) and sense check where you’ve spent money over and above the essentials – mortgage, bills, food shopping, council tax etc. ?????

Understanding where ALL of your money goes may then help you to set a monthly budget for your “fun” expenditure – Takeaway Coffees, Eating Out, Nights out, Holiday fund etc. You may then have surplus funds to allocate to the following:

o?? Clear or reduce as many of your debts (credit card balances, loans, buy-now-pay-later etc) as you can between now and your rate expiry. It will then mean you’ve got more cash available to allocate to your mortgage payment when it increases.

o?? If you’re in the fortunate position of having no debts, you could build up a savings buffer, or start overpaying regularly on your current mortgage. Most lenders allow overpayments of up to 10% of your balance each year without penalty – so overpaying has a dual benefit of: getting you used to a higher monthly payment and reduces your mortgage balance and monthly payment. ?

Securing Your New Rate

You can usually secure a new rate up to 6 months in advance, with the new rate to start simultaneously as your current rate ends – so understand your options as soon as you’re within 6 months of your rate expiry.

You’ll want to understand what both your current lender and the rest of the lenders in the market will offer you, so consider using a mortgage broker, who can research the market and outline your options – saving you time and effort, plus more importantly – giving you reassurance that you’ve got the most suitable rate.

Not only will your broker show you the most competitively priced rates available to you, they’ll advise you on the most suitable options for your situation. For example, extending the term to reduce your monthly payments could be a viable option and ensure your mortgage remains affordable for the coming years. ?

Once you or your mortgage broker have submitted an application to your chosen lender, this will secure the rate, meaning that if rates increase between now and your current rate expiry, you’re unaffected as you’ve locked your new rate in.

However, should rates drop between now and your rate expiry, most lenders will allow you to switch and benefit from the new lower rates. Lenders won’t tend to be proactive on this, so another reason to use a mortgage broker who should monitor this closely, or if doing it yourself – ensure you check for rate changes on a regular basis. ?

What shouldn’t you do

Don’t stick your head in the sand – focus on the things you can control as I’ve outlined and don’t leave things until the last minute!

Don’t accept the status quo and just stick with your current lender. They may end up being the most suitable option for you, but there’s a fair chance they won’t be, so understanding ALL of your options is very important.

Don’t be embarrassed to ask for help – Mortgage Brokers are helping people like you on a daily basis and are there to support, advise and guide you through this now and way into the future!

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*Research from Dashly, which based on a sample of 75,000 owner-occupier and buy-to-let mortgages with initial rates expiring between August 2023 and July 2024, the average monthly mortgage payment is set to increase from ￡747 to ￡1,035.

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I’m Mark Humphrey – founder of MHC Mortgage & Protection Ltd, a mortgage brokerage in Whitstable, Kent and have been in the Mortgage Industry since 2003, working for a number of High Street Banks & Building Societies. I am passionate about sharing my knowledge, experience and expertise to help make mortgages and moving home as simple, stress-free and as positive an experience as possible.