Make a date to check your rate

For some it will be January 31. For others perhaps it's March 1 or April 30, or some time later this year. It's not a date that will be tattooed on your brain like your birthday or your wedding anniversary, but it will have a major impact on the finances of home owners across the country. It's when the fixed-rate period on the mortgage you took out two, three or five years ago comes to an end and you are plonked on to the lender's standard variable rate.

For many people this will mean a hefty increase in their monthly mortgage payments. So, if your fixed-rate period is about to finish, now is the time to think carefully about your next move.

Many borrowers may find significant savings by jumping ship and signing up with another lender. But some will be locked into their loan by early redemption penalties which might mean paying six months' interest or a percentage of the original loan. This could amount to ?2,000- ?3,000 for a ?60,000 loan. Someone who took out a three-year fixed rate mortgage at the start of 1996 at 6.25 per cent can now expect to be moved on to their lender's standard mortgage rate, in many cases 7.45 per cent. Based on these figures, monthly payments for a ?60,000 interest-only mortgage will jump from ?297 to ?353.

Lenders will usually write to borrowers about a month before their fixed-rate period is due to end. Some will offer the chance to take out another similar deal, others will suggest they come in for a chat; some may just inform the customer their rate is going up.

The Halifax says a lot will depend on whether the borrower is subject to redemption penalties. "They would automatically go back on to the standard variable rate. Then really the onus is ultimately on the customer to be aware of what is being offered," says a spokesman, adding: "Our advice in general is 'Come along and talk to us'."

The Nationwide advises customers who want another fixed-rate to contact their local branch, while Midland Bank says: "We will work out what is a cost-effective rate to offer him or her. We would write individually to those customers to say, 'If you wish to renew your fix with us, we can offer you a rate of X for such-and-such a period'."

But don't expect them to come to you with a stonkingly good rate. Sadly, an existing customer will not be offered as good a deal as a new borrower, even if you have always been on time with your payments, says one mortgage expert.

Banks and building societies insist no under-the-table deals are to be had. But anecdotal evidence suggests that for a valued customer threatening to walk away and who is prepared to haggle, some lenders will produce something from up their sleeve. The Halifax used to have a policy of offering secret deals to keep customers on the books, but it ditched this after inconsistencies emerged in the way different branches were treating people.

The Council of Mortgage Lenders, the main industry body, says: "It is always worth seeing what a lender has available. Some lenders have product ranges that are specifically for people who have been with them for a time."

If you are tied by a redemption penalty, you will have to see how the cost of this "fine" compares with the savings from switching lender (see separate panel).

For some, the penalty will exceed the potential savings. But for others - for example, people on very high fixed rates which still have some way to go - the opposite will be true. Some who took out five-year fixed-rate deals in late 1995 will be paying up to 8 to 9 per cent, and paying up and going will almost certainly be the better option.

There are other costs to consider. Switching may mean forking out several hundred pounds on fees which could wipe out the savings. But some banks and building societies now offer remortgagers a package of perks including no administration fee, free valuation and their legal costs paid.

"The minute you are faced with significant set-up fees such as valuation and legal costs, you immediately erode any savings," says Rob Clifford at mortgage broker MPI.

Surprisingly, despite the intense competition for new mortgage business, some lenders have very little to offer for borrowers who want to remortgage. Nationwide, the biggest building society, has just two options: a deal fixed at 6.89 per cent for five years, with no redemption penalties after the fixed period, or its standard variable rate, which is 6.95 per cent.

One new offering which has been attracting a lot of interest among remortgagers is Standard Life Bank's Freestyle flexible home loan, which offers a market-leading variable rate of 6.55 per cent, with a 2 per cent discount for the first six months. Remortgagers don't have to pay an arrangement fee or legal fees provided they use a solicitor nominated by the company, plus they get a free valuation. But there is a redemption penalty if borrowers pull out of the deal during the first year.