Fixed term end date

[AF11]

My 5 year mortgage came to an end in April 24. I renewed and did a 2 year fixed.

Given my old 5 year term had been completed, you would think the new 2 year fixed term would end April 2026. But no, it’s actually locked in until August 26 making it 2 years and 4 months.

Before anyone asks, yes this was on the agreement which I signed. I just want to know the reason for this, why on earth am I locked in for 28m on a 24m fixed deal? Surely this is misleading? The lender is virgin.

[Sarnie]

This is normal, for most lenders.

A two year deal with most lenders is circa 28 months. The extra 4 months is to allow you time to process the application, get your mortgage offered and then get completed.

If you did it in 2 months, then you would get 26 months on the rate.

If it took you 6 months, then you would only get 22 months on the rate.

Only a few lenders offer a 2 year fixed from the date you complete, Nationwide for example.

[Blue_star]

Count your blessings. I personally would hate to remortgage exactly as the market is volatile budget time. Look at what has been happening this month in anticipation for the budget.

[AF11]

Thanks, this makes sense, only caveat is my application was done beforehand and went through at renewal April 2024. I’d have thought the 24m term would start at that point, not 4 months later in August.

I did the 2 year fix pretty much at peak rates hence why I’m a bit annoyed about keeping it 4 months longer than I expected.

[Sarnie]

AF11 said:

Thanks, this makes sense, only caveat is my application was done beforehand and went through at renewal April 2024. I d have thought the 24m term would start at that point, not 4 months later in August.

I did the 2 year fix pretty much at peak rates hence why I m a bit annoyed about keeping it 4 months longer than I expected.

It depends on the lender, sometimes there can be up to 6 months over the 24 months. So you could have started the application two months before your completion date and then still get 28 months on the rate.

I've got a lot of clients coming off 0.99% five year fixed rates currently, who are VERY happy for the additional 6 months on those rates

[AF11]

Thanks again, sounds like it’s pretty standard policy then.

But it does feel like a slight con for lenders to be offering a 24m fixed deal that actually ties you in for 28m or more, especially if you have no overlap from your previous deal. It wouldn’t be accepted for anything else such as a phone/tv/gym contract. I guess it works out if you’re on a good deal but still.

It was my first time renewing a mortgage so lesson learned, at least I know to look out for it next time.