7 Things to Consider if Your Mortgage Product is Due to Expire in 2025
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If your mortgage product is set to expire in 2025, it’s a good time to start planning your next steps. The mortgage landscape is constantly changing, and being prepared can save you money, reduce stress, and help you make the most of your financial situation. Here are seven key factors to consider before your current deal ends.
1. Understand Your Loan-to-Value (LTV) Ratio
Your loan-to-value ratio (LTV) is the percentage of your property’s value that you owe on your mortgage. For example, if your home is worth £300,000 and you owe £150,000, your LTV is 50%.
Why does this matter? Mortgage rates are often tiered, with lower LTVs typically qualifying for better rates. If your property has increased in value or if you’ve paid off a significant amount of your loan, your LTV may have improved. Check your LTV ahead of your product expiry, as this can open the door to better deals when you remortgage.
Tip: Consider how close you may to the next Loan-to-value tier, if you can afford to do so and you will not pay an early repayment charge, consider making a lump-sum repayment to bring your loan within the next bracket, unlocking a potentially lower interest rate.
2. Have You Made Home Improvements?
Home improvements can have a dual effect: increasing your property’s value and potentially reducing your LTV. This could help you secure more competitive mortgage rates. Don’t rely on the lender’s valuation as this may not include any work you have completed.
Action Point: Gather records of any renovations or extensions and their associated costs to present to potential lenders. Some lenders allow you to request an updated valuation of the property
3. Regularly Review Interest Rates
Mortgage rates fluctuate based on economic conditions and decisions by the Bank of England regarding the base rate. In the current environment, rates can be unpredictable, so it’s wise to monitor trends regularly.
Start looking for new deals as soon as you are within the lenders’ eligible switch period. Many lenders allow you to lock in rates for future remortgages, giving you the chance to secure a favourable rate even if the market changes before your deal ends.
Remember: You need to consistently monitor new product rates and this can be time consuming.
4. Should You Consider Remortgaging?
Remortgaging is the process of switching your current mortgage to a new deal, either with your existing lender or a different one.
Pros of Remortgaging:
• Potential access to better rates, as you are reviewing the whole of market options
• Opportunity to consolidate debts or release equity (if needed).
• Greater flexibility to tailor your mortgage to your current needs.
Cons of Remortgaging:
• You may need to undergo full underwriting, which involves assessing your income, expenses, and creditworthiness.
• Fees such as arrangement fees, valuation costs, and legal charges may apply.
• If your circumstances have changed (e.g., a drop in income or a change in employment status), it may be harder to qualify for certain deals.
Tip: Compare deals carefully, factoring in both the rate and any associated fees, to ensure the overall cost aligns with your financial goals.
5. Assess Your Affordability
Your product expiry provides an excellent opportunity to assess your affordability. If your financial situation has changed since you last applied—perhaps due to a pay rise, a career break, or increased monthly expenses—this could impact what you can afford to pay each month.
Consider your new mortgage repayments at the new rate, these may be higher or lower than your current repayments. How will this impact your standard of living for instance.
6. Consider Your Long-Term Plans
Think about how your current and future plans might influence your mortgage choices:
• Are you planning to move? Opting for a shorter-term deal could give you flexibility.
• Do you want payment stability? A fixed-term product can protect you from potential rate increases.
By aligning your mortgage product with your broader life goals, you can avoid unnecessary costs or complications down the line.
7. Get the Timing Right
Timing your next move is critical. Mortgage lenders often allow you to arrange a new deal several months before your current product ends. By acting early, you can avoid automatically switching to your lender’s SVR, which could increase your monthly payments.
Be aware of early repayment charges (ERCs) if you decide to exit your current deal before its expiry.
Why You Should Seek Professional Mortgage Advice
Navigating the mortgage market can be complex, especially if you’re balancing considerations like fluctuating rates, LTV thresholds, and changing personal circumstances. A professional mortgage adviser can simplify the process and help you:
• Find the most competitive rates tailored to your needs.
• Understand the pros and cons of different mortgage products.
• Navigate underwriting requirements, fees, and lender criteria.
• Identify products that align with your long-term financial goals.
Working with a mortgage adviser gives you confidence that you’re making informed decisions based on expert insights. They can also save you time by handling the legwork of comparing deals and managing the application process on your behalf.
Conclusion
With your mortgage product due to expire in 2025, now is the time to start planning your next steps. From understanding your LTV ratio to considering remortgaging and seeking professional advice, being proactive can help you secure the best deal and achieve your financial goals.
Don’t leave it to chance—review your options, prepare early, and take control of your mortgage journey to ensure a smoother transition and better financial outcomes.