What happens after your interest rate ends?
At the end of a fixed, discounted, tracker or capped rate period, the interest rate payable on the mortgage will normally revert to the lenders standard variable rate at the time. Even if there is no change in the current variable rate, you may find yourself paying a higher monthly payment.
For example, if you take out an interest only mortgage of £60,000 at a fixed rate of 4.5% for three years, your monthly interest payments will be £225.00 per month for the three years. If, after the fixed rate ends, the standard variable rate is then 6.5% your monthly payments will become £325.00 per month.
Remember, if you have a capital and interest (repayment) mortgage, the future monthly payments will be based on the reduced loan amount at that time, not on the original loan amount.Mortgage term
People often assume that the normal mortgage term is 25 years, but there is no reason why you cannot choose a different term if it suits your needs and the lender agrees. If you take a repayment mortgage, the shorter the term, the higher the monthly repayments will be, but the total repayments over the term will be less as you will pay less in interest.
