Over 1million families face £3,000 mortgage blow if they fail to switch deals – what to do NOW to cut your costs

MORE than a million homeowners are facing a mortgage bill increase of up to £283 a month as their fixed-rate deals come to an end. New data has revealed that 1,095,905 people who took out two-year fixed mortgages in 2024 are coming to the end of their terms this year, with many risking a hefty hike in repayments if they do not act. The figures, sourced by Compare the Market from the Financial Conduct Authority, show these homeowners took out deals with an average interest rate of 4.81%. If they simply roll onto their lender’s standard variable rate, or SVR, once their fix ends, they could see their monthly mortgage payments jump from £1,149 to £1,432. Sign up for the Money newsletter Thank you! That works out at an extra £283 every month, or £3,396 more over the course of a year, based on an average mortgage debt of £200,250. The current average SVR now stands at 7.13%, according to Moneyfacts, while the average two-year fixed rate is 4.79%, Bank of England figures show. That means homeowners who shop around and switch to a new fixed deal rather than accepting the SVR could save as much as £3,432 a year, or £286 a month. The huge sum of homeowners affected includes 122,526 first-time buyers and 111,349 people who moved home during their mortgage term. It also includes 690,738 people who remortgaged with their existing lender and 122,832 who switched providers when they last took out a deal. Experts are urging anyone with a fixed-rate mortgage ending this year to compare deals well in advance rather than waiting to be automatically moved onto a lender’s default rate. Most read in Money Laura Pomfret, personal finance expert at Compare the Market, said: “An extra £283 a month on your mortgage is a significant amount of money for most households. “That’s more than £3,000 over the course of a year, so simply rolling onto a higher rate without considering your options could have a real impact on your budget.” She added: “A mortgage is likely to be the biggest outgoing in any household, so it’s worth paying attention to and looking for great savings for your budget.” Pomfret said homeowners should use the end of a fixed deal as a chance to review their finances as a whole. She said: “Understanding what your new repayments could be ahead of time means you can plan for any increase and consider where you might need to adjust your budget.” She also warned against leaving it too late, saying: “It also makes sense to shop around well in advance of any fixed deal ending as these things can take time and you could lock in a good rate. “Give yourself plenty of time before your deal ends to understand your options, work out what you can comfortably afford, and seek guidance if you need it.” Pomfret added that borrowers should not just focus on the headline interest rate when comparing deals. She said: “Look at what a new deal will actually cost you each month, alongside any product fees or other charges, and consider how that fits into your household finances.” Sajni Shah, money expert at Compare the Market, said homeowners should not feel they have no choice but to accept their lender’s default rate. She said: “More than one million homeowners are coming to the end of two-year fixed-rates this year, and many could face a significant increase in their monthly repayments if they simply roll onto their lender’s standard variable rate.” She added: “The good news is that if you’re a homeowner coming up for renewal, you don’t have to accept your lender’s default rate. “Taking the time to explore your options before your current deal ends could help you secure a more competitive mortgage and avoid paying more.” Ms Shah urged families to compare the market rather than assuming their existing lender offers the best deal. “She said: “Shopping around to compare mortgages from different lenders is one of the simplest ways to see what’s available and find a deal suited to your individual circumstances. “Even if you ultimately decide to stay with your existing lender, comparing first could give you greater confidence that you’re getting the right mortgage for you.” Homeowners approaching the end of a fixed-rate deal are being advised to start checking their options at least three to six months before their current mortgage expires, giving themselves enough time to secure a new rate before being switched onto a costlier SVR. Comment now