£3,242: The Shocking Annual Cost Of Not Remortgaging
Consumers with a mortgage at one of the UK’s biggest lenders could be losing more than £3,000 a year by staying with their provider’s standard variable rate (SVR).
Consumers with a mortgage at one of the UK’s biggest lenders could be losing more than £3,000 a year by staying with their provider’s standard variable rate (SVR).
A recent study analysing the UK’s six biggest lenders - Lloyds, Nationwide, Santander, RBS, Barclays and HSBC - found that consumers who let their fixed or tracker rate deal expire and roll onto the SVR tend to pay 2.5% more than those who hunt down the best two-year fixed rate deal.
For borrowers stuck in a state of inertia, this can see them paying an average of £3,242 more each year than those who shop around and remortgage for a better deal.
Research also revealed that two-thirds of borrowers are unaware that the SVR is almost always worse than a fixed rate deal.
It’s thought that around three million mortgage customers have seen their loan roll onto their lender’s SVR. Of these customers, a third are believed to be ‘mortgage prisoners’, unable to move onto a better deal due to tightened lending criteria.
Many of these ‘mortgage prisoners’ bought their homes when mortgage criteria offered much more flexibility. Since the financial crisis of 2008, it’s become much more difficult for people to obtain a mortgage, particularly for those who are self-employed or on a low wage.
Although one million people may be stuck with their current lender until a change in their financial circumstances enables them to move to a better deal, two thirds of borrowers could remortgage their homes to make substantial savings.
By comparing deals across the market, homeowners can slash their monthly expenses, free up cash to be spent elsewhere, and save thousands of pounds in interest over the course of their mortgage deal.
If you’d like to improve your finances by remortgaging your home, please get in touch with the team at TaylorMade.
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