The savings available to mortgage holders by remortgaging have reached their highest level in eleven years, according to analysis.
Homeowners could save over £3,000 a year by securing a brand new fixed rate mortgage deal instead of staying on their current lender’s standard variable rate (SVR), as explained in the most recent Moneyfacts UK Mortgage Trends Report.
The increased gap between fixed rates and SVR’s
Many borrowers were fortunate enough to have secured extremely competitive two-year fixed rate deals in the early part 2017 however those deals are now coming to an end and reverting onto much Higher standard variable rate’s (SVR)’s unless they take action.
In January 2017, the typical two-year fixed rate mortgage deal was 2.31%, according to Moneyfacts, while the average standard variable rate (SVR) currently stands at 4.90%.
Unless owners secure a remortgage deal, this could mean they’ll face a 2.59% uplift in the rate they have to pay, that in many cases might add hundreds of pounds to monthly mortgage repayments.
The difference between fixed rates and standard variable rate’s (SVR)’s is the biggest it’s been since February 2008.
For example, somebody with a £200,000 25-year repayment mortgage would see their monthly payments increase by just under £280 a month, equating to an increase of £3,360 over a year if they reverted onto their lender’s standard variable rate at the end of their current fixed rate deal. ions paying above what they could
Millions paying more than they need to
Despite the dramatic savings that may be created by remortgaging, countless owners still languish on their lender’s standard variable rate. Over 4 million households are still sat on their lender’s standard variable rate SVR.
If you’re amongst them, or you’re approaching the closing months of your current mortgage deal, you ought to review your options sooner rather than later. bear in mind whether or not your existing mortgage has early repayment charges, you could still secure your next mortgage prior to the end of your current deal, as most remortgage offers are valid for between 3 and 6 months from the date they’re issued.
Arranging your next mortgage prior to the end of your current deal means that you’ll be able to move straight from one deal to a new one without moving onto your lender’s SVR. It will also mean that you’ll be able to benefit from the current competitive mortgage rates.
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