If your five-year fixed-rate mortgage is ending in 2026, you could be facing a noticeable increase in your monthly repayments. MB Associates’ Managing Director Monica Bradley explains the options that could help to ease the pressure.

Nearly one million five-year fixed-rate mortgages arranged in 2021 are due to end in 2026, according to UK Finance.

Many of these homeowners secured exceptionally low rates, so it’s completely understandable that they may be worried about what their next mortgage payment will look like. I’m speaking to clients who are concerned about this now, but my advice is always the same – don’t ignore it but don’t panic. There may be more you can do than you realise.

Some borrowers on five-year terms are currently paying rates as low as 0.96% or 1.8%. When those deals end, the increase can be significant. One client with a £300,000 mortgage and 13 years remaining, for example, could see their payments rise by around £560 a month.

Every household is different, of course, and the right answer will depend on your own circumstances. However, there are several options worth discussing.

Extending your mortgage term

This can bring the monthly payments down by spreading the mortgage over a longer period. This may give you some much-needed breathing space. You are likely to pay more interest overall, though, so it’s important to look at the longer-term cost and consider how the new term fits with your retirement plans.

Switching to interest-only

With an interest-only mortgage, you only pay the interest each month, which can reduce your payments. However, the mortgage balance itself won’t come down, and you will need a clear plan for repaying the capital later, such as planning to sell the property. This option is subject to lender criteria and won’t be right for everyone, but it may be worth exploring.

Speaking to an experienced broker

A good mortgage broker will look at the whole picture – your income, spending, mortgage term and plans for the future – before exploring the deals that may be available from different lenders. Even if your circumstances have changed over the past five years, don’t assume you have no options. A conversation can often give you clarity and peace of mind.

Taking a fresh look at your spending

It’s also worth taking an honest look at where your money goes each month, including takeaways, subscriptions, car finance and holidays. I’m not saying you can’t treat yourself or enjoy life, but cutting back where you can will help.

Rest assured you won’t be the only one reducing your spending. Figures published by Nationwide in January suggest that many people are already making changes. Its survey found that 31% planned to cut back on eating out, 24% intended to cook more to save money and 26% expected to spend less on fashion and clothing. A few manageable cutbacks here and there will add up and make a difference.

Addressing the situation early

Don’t wait until your current deal is about to expire. Starting the conversation six months in advance gives you more time to understand your options, get your finances in order and secure a new deal where appropriate.

Your life may look very different from when you arranged your mortgage five years ago. You may now have children, higher household bills or other financial commitments. That is why a fresh review is so important: it gives us the chance to look at where you are today and help you find an approach that feels manageable.

If your five-year fixed rate is coming to an end and you’re worried about what happens next, we’re here to help.