how you can avoid a payment shock

The 1.4m mortgage borrowers whose fixed rate deals will come to end this year could see their monthly payments leap by nearly £400 if they don't plan ahead and arrange to switch to another product.

Most mortgage deals revert to the lender's standard variable rate (SVR) once the fixed or discounted period is over. This time two year's ago, West Bromwich building society had the leading two-year fixed rate at 4.19%. Someone who took that deal and has a £150,000 interest-only mortgage will see their payments leap from £524 a month to £917 when the fixed rate expires at the end of March and they move onto West Brom's SVR of 7.34%.

It is therefore crucial to make sure you remortgage onto another fixed or discounted product. Unless you are tied in to a mortgage deal with extended penalties, there is no need to pay your lender's SVR – it is the most expensive option by far.

But, be warned – even if you remortgage, you will probably have to pay more than you do at the moment. Bank rate is currently 5.25%, compared with 4.5% this time two years ago. And, as a result of the credit crunch, many lenders have been looking to widen their margins. Consequently, mortgage rates are significantly higher than they were in 2006.

There are some good deals available though and the Council of Mortgage Lenders said this week that the payment shock for those coming off cheap fixed rates will not be as severe as many had expected.

While the credit crunch has resulted in many lenders increasing their margins and becoming more cautious about who they will to, it has also brought some relief to borrowers. The Bank of England's decision to cut interest rates in December and earlier this month stemmed from concerns about the impact of the financial crisis on the economy.

As a result many mortgage rates are lower than they were last summer – in fact if you want long-term security you can even secure a ten-year fixed rate deal at a lower rate than the leading two-year deal that was available six months ago.

Last August, West Brom had the lowest two-year fix at 5.3%, but you can now lock into two year deals below 5%. First Direct has a two-year fix at 4.75%, although the fee is high at £1,498. Alternatively, Derbyshire building society has a two-year rate at 4.99% with a £999 fee.

If you would prefer longer-term security, Giraffe Money has a five-year fix at 5.24%. The arrangement on this deal is £999. The best 10-year fix also has a rate of 5.24%. It's from Dunfermline building society and the fee is low at £599. However, you will have to pay a penalty if you want to redeem the loan within 10 years so fixing for such a long period of time is not the best option if you think your circumstances may change.

However, if you think interest rates will fall further and are prepared to take a bit of a gamble, Hanley Economic building society has a two year discount with a rate of 5.10%. There is a £799 arrangement fee but borrowers receive a free valuation. Those remortgaging also get free legal work.

For those wanting a penalty free deal, John Charcol's lifetime tracker at 5.63% is the best option. The fee is £995 but if you are remortgaging you will receive a free valuation and free legal work.

Whichever mortgage option you choose, remember to look beyond headline rates and consider all aspects of the deal, such as the length of time you're locked in for and the impact of the fees.

Many mortgage lenders will now allow you to add fees on to the cost of the loan. While this may seem like a way around high upfront payments, remember that you will pay interest on the fee and so it will cost much more in the long term.