Don't let the Iran war add thousands to your mortgage costs

See more This is Money on Google - save us as a Preferred SourceBy ED MAGNUS, SENIOR THIS IS MONEY REPORTER Updated: 10:14 BST, 3 June 2026

Half a million households face a payment shock of up to £11,500 on their mortgage this year, as the Iran war continues to drive rates higher.Homeowners coming to the end of their cheap five-year fixed-rate mortgages over the next six months face a steep jump in repayments, with inflation staying high. Many homeowners will be coming off generous rates that were fixed five years ago for as little as 0.91 per cent, according to Moneyfacts. Someone remortgaging this month faces paying 4.65 per cent in interest. A homeowner with a £200,000 mortgage being repaid over 20 years who is coming off the lowest five-year fix will see monthly repayments jump £384 a month – £4,608 a year. With a £500,000 mortgage, payments surge from £1,863 a month to £2,822 – an extra £11,500 a year.Here’s how to shield yourself from the worst of the shock.Consider a trackerThe popularity of tracker rates, which follow the Bank of England base rate, plus a certain percentage on top, has soared this spring as they now look to be good value.The proportion of borrowers opting for trackers has trebled in the wake of the Middle East crisis, according to Stonebridge Mortgage and Protection Network – rising from 4.1 per cent at the beginning of the year to 12 per cent in April.The best two-year trackers for remortgaging are below 4 per cent – almost 0.7 percentage points below the lowest five-year fixed rates. Homeowners coming to the end of cheap five-year fixed-rate mortgages over the next six months face a steep jump in repayments, with inflation staying highIt means someone opting for a tracker could see the Bank of England hike interest rates two or even three times this year to 4.5 per cent and still be better off than if they fixed.However, experts warn that for those seeking stability, a tracker mortgage may not be the best option.Play it safe and fixNouran Moustafa, an independent financial adviser at Roxton Wealth, says she isn’t typically recommending trackers.‘A tracker can make sense for someone with strong surplus income, flexibility and the stomach for payments moving around,’ says Moustafa. ‘It is not ideal for a borrower already nervous about the jump from a 2021 fixed rate.’Mortgage broker Ravesh Patel says most customers opt for a five-year fix. He says: ‘People value stability more than the possibility of getting a lower rate in future.’Make sure you don’t fall on to your lender’s standard variable rate – the default rate borrowers are put on when a fixed-rate deal ends. This can be 7 per cent or higher.You can reserve a new mortgage rate as early as six months before your current one ends. If you then see a cheaper deal, you can usually switch until just before the new mortgage begins. You can reserve a new mortgage rate as early as six months before your current one endsDon’t just stick with your current bank as they may not offer the cheapest rates. A mortgage broker can help find the right deal for you – many are fee-free and charge the lender instead.Consider using savings to pay off some of your mortgage to get a better rate, while another option would be to lengthen your mortgage term when you refinance, spreading repayments over a longer period and reducing how much you pay a month. But beware – interest racks up so you could pay hundreds of thousands of pounds more in the long run.Another option for those struggling with payments would be to switch to an ‘interest-only mortgage’ as a temporary measure.This is where borrowers only pay the interest accrued on their balance each month, with the loan remaining the same. Monthly payments will be lower as a result.Someone with a £200,000 mortgage over 25 years on a rate of 5 per cent would pay £834 a month less if they switched to an interest-only deal.Best mortgage rates and how to find them Mortgage rates have shot up again due to inflation triggered by the conflict with Iran reversing hopes that the Bank of England would cut rates. This means those remortgaging or buying a home face higher costs.That makes it even more important to search out the best possible rate for you and get good mortgage advice, whether you are a first-time buyer, home owner or buy-to-let landlord.This is Money's partner L&C can help you with its fee-free mortgage service.> Compare mortgage rates> Find the right mortgage for you To help our readers find the best mortgage, This is Money has partnered with the UK's leading fee-free broker L&C.This is Money and L&C's mortgage calculator can let you compare deals to see which ones suit your home's value and level of deposit.You can compare fixed rate lengths, from two-year fixes, to five-year fixes and ten-year fixes.If you’re ready to find your next mortgage, why not use This is Money and L&C’s online Mortgage Finder. It will search 1,000’s of deals from more than 90 different lenders to discover the best deal for you.> Find your best mortgage deal with This is Money and L&C Mortgage service provided by London & Country Mortgages (L&C), which is authorised and regulated by the Financial Conduct Authority (registered number: 143002). The FCA does not regulate most Buy to Let mortgages. Your home or property may be repossessed if you do not keep up repayments on your mortgage.