Did you know that one in four homeowners is paying their mortgage provider’s standard variable rate? How costly can this be?
According to recent research by an online mortgage broker, a quarter of homeowners are on their mortgage provider’s highest rate. When the fixed rate ends on their arranged deals, 27% were found to be on standard variable rate (SVR) deals. Being on such a deal could cost over £4,000 every year.
The differences can be vast. The average SVR is around 3.5%. Some can be 6%. The incredible statistics from the research show that 10% of people thought that by paying higher prices every month, the SVR would permit them to pay off the mortgage quicker. The fact is, the extra money is merely being paid in interest, not towards the mortgage total.
Fewer people are remortgaging
When it comes to re-mortgaging, research shows it dropped by a third from February to November 2020.
Just over half of people involved in the research knew that re-mortgaging was typically done to switch to a better deal.
The founder and chief executive of Habito, Daniel Hegarty, said ‘With the UK likely facing another year of uncertainty, it is more important than ever to ensure you aren’t paying over the odds much on your mortgage. If you’re on a 2-year fixed rate, then do make sure you have a regular cycle of refinancing. We see re-mortgaging a bit like switching utility or broadband providers, but with bigger returns.
‘There are lots of options for re-mortgaging out there - whether you’ve been furloughed, have experienced a reduction in income or you’ve taken a mortgage payment holiday, your lender should be open to you doing a product transfer with them.’