Understanding the Transition to a Variable Rate
When your fixed-rate mortgage term comes to an end, your interest rate is no longer locked in. This typically means that the lender will transition your loan to a variable-rate mortgage, or the rate could be adjusted to the standard variable rate (SVR). The SVR is subject to changes based on market conditions, so your monthly payments could increase or decrease depending on the direction of interest rates. It’s essential to review the terms of your mortgage contract beforehand to understand exactly how the rate will change and if you need to take any action.
Exploring Your Refinancing Options
Once your fixed-rate period ends, you have the option to either switch to a new fixed-rate mortgage or refinance with a different lender. Refinancing allows you to lock in another fixed rate or explore better terms based on current market rates. You may also have the opportunity to pay off part of the mortgage or adjust the loan length. It’s crucial to evaluate your financial situation and compare different mortgage deals to find the best fit. Failure to act before the rate changes could lead to higher payments, so it’s wise to start exploring refinancing options well before the fixed term expires. What happens fixed rate mortgage ends