Affordability Myth #4: “Once I’ve locked in a mortgage, my interest rate won’t change”

It’s a comforting thought – you get your mortgage, set your payments, and that’s that. Right?

Not quite.

Why this myth sticks around

When you hear the term “fixed-rate,” it’s easy to assume your interest rate (and your payments) will stay the same forever. But the truth is, that fixed rate has an expiry date and after that, things can change pretty quickly.

What’s actually going on

There are two main types of mortgage interest rates: fixed-rate and variable-rate.

• With a fixed-rate mortgage, your interest rate stays the same, but only for a set period (usually 2, 5 or 10 years).
• With a variable-rate mortgage, the rate can change at any time, depending on things like the Bank of England base rate or your lender’s own decisions.

Even if you fix your rate, once your deal ends you’ll usually move onto something called the standard variable rate (SVR) – and that can be a lot higher than what you were originally paying.

What to keep in mind

If you’re on a fixed-rate, make a note of when it ends. Set a reminder a few months in advance so you can start looking at your remortgaging options early. Otherwise, you could end up on a much more expensive deal without realising it.

If you’re on a variable-rate, keep in mind that your payments could go up (or down) based on changes in the wider economy. It’s worth building a little flexibility into your budget just in case.

The takeaway?

Mortgages aren’t “set and forget”. Know what type of deal you’re on, when it ends, and what your options are when that time comes. A little planning now could save you a lot of money (and stress) down the line.