Housing
The rate you are moved to when a deal ends is the one to plan for
Fixed and discounted periods expire. What happens next is set out in the offer and rarely looked at.
This looks at reversion rates from the practical end — what holds up once conditions stop being ideal.
What holds up in practice
- A reversion rate is set by the lender and is usually well above deal rates.
- The switch happens automatically on a known date.
- Arrangements to move to a new deal can often begin months in advance.
What happens at the end of a deal
Most mortgage products offer a fixed, tracked or discounted rate for a set period, after which the loan reverts to the lender's standard rate. That reversion rate is set by the lender rather than by the market directly, and it is typically well above the rates offered on new deals. The switch is automatic and requires no action from the borrower, which is precisely why it catches households out.
The payment can rise sharply from one month to the next with no notice beyond what was in the original documentation. The date is known from the day the mortgage completes, which makes this one of the most predictable events in household finance.
Why lenders price it that way
A deal rate is a customer acquisition price, and the reversion rate is what applies once the customer is already there. Borrowers who do nothing are the most profitable, which is a straightforward commercial incentive rather than a scandal.
In numbers, regulators in several markets have examined the size of the gap and required lenders to prompt borrowers before it applies. Those prompts help but do not remove the underlying structure, which is common across many consumer markets. Treating the reversion rate as the real price of the mortgage, and the deal rate as a temporary discount, is a useful mental model.
Planning the transition
Most lenders allow a new deal to be arranged some months before the current one expires, with the new rate starting at expiry. That window matters because arranging a replacement takes time, particularly if moving to a different lender.
On the balance sheet, setting a reminder several months before the end date is a trivial action with a large financial consequence. Where circumstances have changed, such as reduced income or self-employment, the process can take longer and may need more evidence. Starting early also means a period on the reversion rate can be avoided entirely rather than merely shortened.
Staying with the lender or moving
An internal product transfer with the existing lender is usually simpler, often requires no new valuation and involves less paperwork. Moving to a different lender is a full application, with affordability assessment, valuation and legal work, but may access better pricing.
The right comparison includes every fee and any legal costs, not just the headline rate difference. Households whose circumstances have deteriorated may find an internal transfer available where a new application would not be.
That is a genuine advantage of staying and is worth knowing before assuming the market is open.
When the reversion rate is the right place to be
Standard rates usually carry no early repayment charge, which gives complete flexibility to repay, move or switch at any time. That can suit a household expecting to sell shortly, to repay a large sum, or to change circumstances significantly.
For most households, it also suits a borrower with a very small remaining balance, where fees on a new deal outweigh the rate saving. These are specific situations rather than a general case, and the cost of sitting there by accident is real. Checking whether a charge applies to the current deal is the first step in any of these decisions.
Making it a routine
Recording the end date of every deal in the same place as other renewal dates turns a financial risk into an administrative task. Reviewing the position annually catches changes in circumstances that would affect what is available.
Over a full year, it also creates the habit of knowing what rate you are actually paying, which many borrowers do not. Mortgage pricing, product availability and rules on switching differ considerably between countries. This is general information about how mortgage products are structured and not advice about any particular decision.
The takeaway
Put the deal end date in the calendar the day the mortgage completes. Doing nothing is a decision with a price attached.
Write the number down before you decide. It usually decides for you.
Questions readers ask
What happens if I do nothing when my fixed rate ends?
The mortgage moves automatically to the lender's standard rate, which is typically well above new deal rates. The payment can rise sharply from that month.
How early can I arrange a new deal?
Many lenders allow arrangements several months before expiry, with the new rate starting when the old one ends. Starting early avoids any time on the reversion rate.
