With approximately 700,000 households in the UK set to reach the end of their fixed-rate mortgage deals in 2025, mortgage advisers must proactively guide clients through the transition. Many borrowers will face increased monthly payments as they move from historically low fixed rates to potentially higher standard variable rates (SVRs) or new fixed-rate deals. For new or less experienced advisers, understanding how to support clients during this critical period is essential.
Understanding the Impact of Fixed-Rate Expiry
When a fixed-rate mortgage term ends, borrowers have several options:
- Move onto the lender’s SVR – Often higher than fixed rates, leading to increased repayments.
- Remortgage with the same lender – A new deal may be available, but rates could be higher than before.
- Switch to a new lender – A competitive remortgage deal might offer better rates and terms.
- Consider alternative mortgage products – Tracker, offset, or interest-only mortgages could provide tailored solutions.
How Mortgage Advisers Can Support Clients
Start the Conversation Early
Many borrowers are unaware of the financial impact of their fixed-rate term ending. Advisers should reach out 6 to 12 months before expiry to discuss options and conduct affordability assessments.
Actionable Tip: Set up an automated system to notify clients well in advance of their deal expiry, ensuring they have enough time to review their options.
Assess Client Affordability and Options
With potential rate increases, affordability will be a primary concern. Advisers should review a client’s income, expenses, and credit profile to determine suitable refinancing options.
Key Considerations:
- How much will their monthly payments increase under different scenarios?
- Can they overpay before their deal ends to reduce their loan balance?
- Are they eligible for exclusive retention deals from their existing lender?
Exploring Refinancing Strategies
Refinancing can help clients secure better terms, but the right approach depends on market conditions and borrower circumstances.
Options for Clients:
- Fixed vs. Tracker Mortgages – If interest rates are expected to drop, a tracker mortgage could be an option, but fixed rates offer certainty.
- Extending Mortgage Terms – Lengthening the mortgage term can reduce monthly payments but results in higher interest paid over time.
- Offset Mortgages – Clients with savings may benefit from offset products that reduce interest charges.
Navigating Affordability Challenges
Lenders have tightened affordability assessments, making it harder for some borrowers to remortgage. Advisers should help clients prepare by:
- Improving credit scores before applying for a new deal.
- Reducing outstanding debts to enhance affordability.
- Providing evidence of stable income, especially for self-employed clients.
Pitfall to Avoid: Advisers who wait too long to assess affordability may find their clients locked into less favourable options. Early planning is essential.
Common Pitfalls and How to Overcome Them
Clients Waiting Until the Last Minute
Pitfall: Many borrowers leave decisions too late, reducing their refinancing choices.
Solution: Proactively educate clients about their options well before their deal expires.
Not Shopping Around for the Best Deals
Pitfall: Some advisers only consider the client’s current lender rather than comparing market-wide options.
Solution: Use sourcing tools to explore multiple lender products and identify the best deals.
Failing to Prepare Clients for Affordability Tests
Pitfall: Clients may assume they will automatically qualify for a new deal.
Solution: Conduct mock affordability assessments and guide clients on improving their financial standing.
Final Thoughts
Helping clients transition from their fixed-rate mortgages smoothly is a key responsibility for advisers. By starting conversations early, exploring refinancing strategies, and proactively addressing affordability concerns, advisers can add real value and build long-term client relationships.
With interest rates and economic conditions constantly shifting, mortgage advisers must stay informed and adaptable to provide the best possible guidance to clients in 2025 and beyond.
