Coming To The End Of Your Fixed Rate Mortgage Period?

Finish Line- Fixed rate period over

More than one million people in the UK are going to face a sharp jump in their mortgage payments when they’re thrown out of their honeymoon fixed rate period, and put onto a standard variable rate.

The average fixed rate mortgage last year was 5.5%, the average standard variable rate is 8-9% at the moment. That could potentially mean some people will face a 3.5% jump in monthly mortgage payments. To put it in perspective, if you’re now paying £800 per month, you’ll stand to pay approximately £1200. That’s some serious shit, right? Right.

If you’re one of those mortgage borrowers that are blissfully unaware of what I’m talking about (I know there are a lot of you out there), then I suggest making a call to your mortgage lender and investigating whether you’re on a fixed rate period, and whether you’re due to get thrown onto the standard variable rate anytime soon. But trust me, if you’ve already been thrown onto a standard variable rate without anticipating the new rates, you’ll definitely know about it (unless you don’t check your bank statements).

I watched this programme last night called, “The truth about property” on BBC 2, did anyone else happen to watch it? Featured, was a freshly redundant estate agent that had been releasing equity from his home for years to maintain a lifestyle which wasn’t realistically with in his comfort zone. I’m not sure why he released so much equity (40k, which was a 3rd of the property value) to maintain a lifestyle, which to me, seemed less than mediocre. He was introduced onto the show sipping Champaign in his garden shed, bathing in a cheap looking hot tub. I didn’t get it. But for some reason, it was meant to come across as glamorous. Funny, I find nothing glamorous about releasing equity out of a small property to fund boyish perks like hot tubs, which requires you to walk across a wet British garden into a shed to feel the benefits.

Overtime the guy had exhausted his right to release further equity from his property, which left him in a dilemma- he had bills to pay, with no job, and no money. To make things even more unbearable, his fixed rate mortgage periodhad come to an end, and he was put onto a standard variable rate of 9%. The difference between the fixed rate and variable rate was £400 per month, so it was a beastly amount.

Now, this guy was an estate agent, so I’d like to think he had a vague understanding of how mortgages work. Why he let himself get into such a predictable problem is beyond my comprehension; he actively allowed himself to slip into the variable rate period. After his brain had caught up with reality, he slowly began to realise how much extra he was unnecessarily paying. He left us with these final words, “err yeah, I need to think about remortgaging immediately”. No shit, Sherlock.

Anyone can typically start planning and executing a remortgage transition 3 months before they’re due to come off their tie in period with their current lender, so they can slip straight into their new policy. So why the hell didn’t he plan remortgaging before getting thrown onto the variable rate? The mind boggles.

Now this is the best part; lo and behold, bearing in mind he got into needless debt, sold his precious TT for breathing space, released copious amounts of equity to maintain a average lifestyle, and consciously went onto the variable rate, is now a mortgage broker. Unbelievable.

If you’re soon coming to the end of your fixed rate period, then for the love of God, make sure you remortgage before the standard variable rate kicks in. By doing so, you could end up paying less than you’ve ever paid before. Find out more by following the relevant links…

Relevant link:
The Importance Of Remortgaging

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