More than 800,000 fixed-rate mortgages ending: how much will your repayments go up by?

More than 800,000 homeowners still face the 'nightmare' of having to remortgage onto a much higher rate this year.

Lenders have been upping their rates significantly in recent weeks, adding further strain to people who need to refinance.

But the costs could be even greater for those who fail to switch deal and are automatically put onto their lender's default standard variable rate (SVR).

Here, Which? explains your options when remortgaging and offers advice on the best rates currently available.

Hundreds of thousands coming off cheap fixes

Data from the Financial Conduct Authority shows that 116,000 households will be coming to the end of a fixed-rate deal in June.

A further 360,000 will then be up for renewal across the following three months (July, August and September), followed by another 341,000 in the final quarter of the year (October, November and December), according to the Office for National Statistics.

The majority of these fixed rates were set at interest below 2% – but current mortgages are priced significantly higher than they were two years ago.

Sarah Coles, head of personal finance at Hargreaves Lansdown, says homeowners coming up for renewal are facing a 'remortgage nightmare'.

'They’ve been shielded from the horror of rate hikes so far by a fixed mortgage, and when their deal runs out, they face the full force of the rises in one single hit,' she said.

'Anyone whose deal comes to an end in the coming year is set to see their monthly payments increase by an average of £192.'

• Find out more: what to do if you need to remortgage

Why remortgaging onto a new deal is crucial

With interest rates as they are, it's crucial borrowers find a deal that best suits them – otherwise they could be forking out hundreds of pounds extra each month.

Each homeowner coming to the end of their mortgage term faces the prospect of getting automatically transferred onto their lender's standard variable rate (SVR).

The SVR is a default rate set by individual lenders, which is almost always considerably more expensive than the fixed rate you'll have been paying. It can be raised or lowered at any time, so borrowers have no control over the changes and have to pay the set rate.

A plus side to SVR mortgages is they tend not to have early repayment charges – providing the flexibility to pay off your mortgage more quickly or switch to a new mortgage deal without penalty. But for those wanting to repay as little as possible each month, they should be avoided.

• Find out more: SVR mortgages explained

How much more will I pay on my lender's SVR?

We've crunched the numbers to give a better picture of the additional cost of lapsing onto your lender's SVR.

For example, if you took out a mortgage of £200,000 for 25 years in June 2021, you're likely to have secured a rate of around 2.59% (the average for a two-year fix at the time).

The monthly payments would have been £906 for the past two years, but the fixed term is now coming to an end. You would have paid off about £12,000 in that time, so you'd still have about £188,000 outstanding. 

The average standard variable rate is currently 7.52% and if you paid that for the remaining 23 years, the repayments would jump significantly to £1,434 a month – a £528-a-month increase.

So it's important to check what SVR your lender charges and whether you could afford the jump in repayments if you don't secure another deal. We've broken down how you'd fare on the SVR set by the UK's 10 biggest mortgage lenders using the example above. The table is ordered alphabetically.

Standard variable rate vs fixed-term deals

The average SVR now stands at 7.52% – that's significantly higher than the average two-year fix of 5.79% and the average five-year fix of 5.48%.

Using the same example as above, a homeowner remortgaging onto the average two-year fix would have a new monthly bill of £1,234, while someone refinancing onto the average five-year fix would pay £1,200. Meanwhile, those on the average SVR would have to fork out £1,434.

The graph below shows how average fixed-term rates and the average SVR have changed over the past two years, according to Moneyfacts.

• Find out more: remortgaging: how to save thousands on your mortgage

Best remortgaging rates up to 90% loan-to-value

The cheapest mortgage rates tend to be available at up to 60% loan-to-value (LTV), meaning they're only on offer to people with a lot of equity in their home.

Rates are high compared with previous years, but you'd still be significantly better off not lapsing on to your lender's SVR.

The table below shows the best rates available on two-year and five-year fixes at four popular LTV levels.

How much will I be paying when my mortgage ends?

Check out our mortgage repayment calculator to see how different interest rates will impact your repayments.

You can also browse our full list of mortgage calculators for more help crunching the numbers.

When can I remortgage?

You can usually lock in a new mortgage up to six months before the end of your fixed term, so it's worth shopping around ahead of time.

Your lender will write to you a few months before the fixed term ends, but you may wish to get in touch yourself so you can compare deals sooner.

If you switch to another mortgage with the same lender, this is called a product transfer. Staying with the same bank is likely to be quicker and easier, but you might be able to find a much better rate from a competitor.

Remortgaging can save you a lot of money, but you should only switch at the end of your fixed term. If you switch earlier, you may need to pay an early repayment charge to your lender, which can run to thousands of pounds.

Head to our guide on remortgaging for all of our tips on getting through the process.