Why locking in a new mortgage deal could save you money

Even if your current mortgage deal doesn’t expire for a few months, searching the market now could be worthwhile and might even save you money.

You can usually lock in a new mortgage deal up to six months before your existing one ends. While it might seem like a non-essential task right now, tackling it sooner rather than later could be beneficial. Read on to find out why.

Avoid paying your lender’s standard variable rate

Normally, when your mortgage deal ends, you’ll be moved on to your lender’s standard variable rate (SVR).

Paying this can seem simple, as you won’t need to reapply for a mortgage, you’ll simply continue making repayments. However, the SVR isn’t usually competitive, and it could cost you thousands of pounds more in interest over the full mortgage term.

Indeed, according to Moneyfacts, in December 2024, the average SVR was 7.85% – far above the 5.52% a homeowner might secure if they took out a two-year fixed-rate mortgage.

If you had a £150,000 mortgage with a 15-year mortgage term, an interest rate of 7.85% would lead to monthly repayments of £1,421 and paying more than £105,000 in interest over the full mortgage term. If you took out a deal with an interest rate of 5.52%, these figures would fall to £1,227 and around £70,800 respectively.

So, locking in a new mortgage deal could mean you avoid paying your lender’s SVR and save money.

There are times when moving on to the SVR makes sense. For instance, if you’re planning to move home soon, taking out another mortgage might mean you need to pay an early repayment charge when you do. So, considering your personal circumstances is important.

Protect yourself from potential interest rate rises

The Bank of England’s (BoE) base interest rate has a direct effect on the cost of borrowing through a mortgage. As of February 2025, the base rate is 4.5%.

While it’s predicted that the BoE will make several rate cuts throughout 2025 as inflation stabilises, this can’t be guaranteed.

It’s impossible to predict what’s around the corner, and unforeseen factors might even mean the BoE increases interest rates before the end of the year. Indeed, the Covid-19 pandemic and war in Ukraine contributed to the BoE’s decision to increase the base rate and couldn’t have been predicted by homeowners.

So, locking in an interest rate now could mean you’re protected from future rate rises.

In addition, you can usually leave the deal you’ve locked in should interest rates fall and you find a better option before the deal starts.  So, securing a deal now and then reviewing your options as the expiry date on your current mortgage nears could mean you’re able to find the right deal for you.

You could benefit from lower fees

Some mortgage lenders will offer competitive deals, such as lowering arrangement fees or even offering a lower rate of interest, to those who lock in a deal early.

By searching for a deal around six months before your existing one ends, you’re placing yourself in a better position to take advantage of these deals if they come up.

Avoid making last-minute decisions

Finally, taking out a mortgage can be stressful, and feeling rushed while you’re doing it can make it even more so.

Feeling pressured to find a mortgage might mean you rush into an application and end up with a mortgage deal that isn’t right for you. So, give yourself time to go through the different options.

A mortgage application can take time, as you’ll often need to provide paperwork and the lender will assess your affordability. Starting the process sooner means you’re less likely to face delays that could result in you paying your lender’s SVR.

It also means that should a lender reject your mortgage application you have time to reassess your options.

Get in touch to talk about your mortgage needs

If you’ll be searching for a new mortgage deal in 2025, please contact us. We could work with you to find an option that suits your needs and offer guidance throughout the application process to make it as smooth as possible.

Please note: This blog is for general information only and does not constitute financial advice, which should be based on your individual circumstances. The information is aimed at retail clients only.

Your home may be repossessed if you do not keep up repayments on a mortgage or other loans secured on it.