What is the difference between a mortgage term and a mortgage deal?

The term is how long you have to repay the whole loan. The deal is the interest rate arrangement covering a much shorter period within it. Confusing them causes people to miss the most expensive moment in a mortgage.

The mortgage term. The total length of the loan — traditionally 25 years, now frequently 30, 35 or 40. At the end of it, the mortgage is repaid and the property is yours outright.

Longer terms reduce monthly payments and substantially increase total interest paid. Extending from 25 to 35 years can add a very large sum over the life of the loan, which is worth calculating rather than assuming.

The deal (or product) period. The rate arrangement, typically two, three, five or ten years. During it you pay the agreed rate, and early repayment charges usually apply.

What happens when the deal ends — and this is the point. You do not have to repay anything. The mortgage continues, but you automatically move onto the lender's standard variable rate (SVR), which is almost always considerably more expensive.

The monthly payment can jump substantially overnight, and lenders are not obliged to prevent it. Drifting onto the SVR is one of the most common and most expensive mortgage mistakes, and it happens simply through inattention.

What you should do, and when:

Start looking around six months before the deal ends. Offers are typically valid for three to six months, so you can secure a rate early and switch the moment the deal expires without an early repayment charge.

A product transfer with your existing lender is usually simplest, often requiring no new affordability assessment or valuation.

Remortgaging to a different lender may be cheaper but involves a full application, legal work and a valuation.

Set a calendar reminder the day the deal starts.

Other related terms: porting moves a deal to a new property; overpayments are usually capped at 10% a year during a deal.