“Lender’s Early Termination of Fixed-Rate Deal Raises Concerns for Homeowners”
In a recent question posed by a reader of Money blog, Michelle from Kent, the issue of lenders ending fixed-rate mortgage deals early has been brought to light.
Michelle had purchased her first flat in April 2023 with a two-year fixed-rate mortgage, secured with the assistance of a broker. However, her broker has now informed her that her fixed-rate deal is set to end in November, much earlier than expected. When she contacted her lender, she was informed that the deal she was on no longer exists. This has left Michelle wondering if there is any way to maintain her current rate.
To address this issue, we turned to David Hollingworth, associate director at L&C Mortgages. According to Hollingworth, fixed mortgage rates are designed to “lock in” the interest rate for a specific period of time, usually two, three, or five years. Once the deal is taken, the terms cannot be changed by the lender and the rate cannot be ended prematurely.
However, some lenders may fix their deals for a specific number of years from completion, while others may have a fixed end date. This means that the fixed rate may last even longer than the initial two-year period, depending on when the application was made. Additionally, the process of completing a mortgage deal can be lengthy, especially when there is a long chain of properties involved.
Hollingworth suggests that homeowners review their original mortgage offer, which will specify all the product details, including the end date of the fixed-rate period and the subsequent rate the mortgage will move onto. It is important to note that this rate is often higher than the fixed rate, making it beneficial for homeowners to shop around for a better deal before their current one ends.
In order to find the best rates, Hollingworth recommends seeking the assistance of a broker who can help navigate the options from both the current lender and the wider market.
It is worth noting that this feature, originally published in our Money blog, is for informational purposes only and should not be considered financial advice. If you have a similar dilemma or consumer dispute, please submit it to news@skynews.com with the subject line “Money blog” or contact us via WhatsApp.
