- Remortgagers who end up on default rates paid an average £371 extra
- Some homeowners paying triple the interest rate they would on a fixed rate
- Seven out of 10 borrowers have never been contacted with an updated deal
A third of mortgage holders whose deals expired last year ended up paying an additional interest of hundreds of pounds which could have been avoided had they remortgaged sooner.
Homeowners coming to the end of initial deal periods, which will typically be fixed rates but sometimes trackers, are failing to get their act in gear to move to a new mortgage – and slipping onto expensive default standard variable rates instead.
Borrowers who left their mortgage renewal too late, paid an average additional interest of £371 each after ending up on their lender’s standard variable rate, according to research from mortgage adviser Dynamo and broker Countrywide. Some homeowners could even be paying triple the interest rate they would on a fixed rate.
Seb McDermott, chief executive at Dynamo, said: ‘The research shows that far too many people are not switching mortgage deals in time.
‘This can prove costly – to the tune of nearly £62 a week for the six-week period – which is more than the average family food shop.’
McDermott recommends that people start their search around four months before their current deal is due to expire.
Separate research from MoneySuperMarket has found that more than 70 per cent of homeowners have not considered remortgaging their property – despite significant savings available for at least a quarter of homeowners.
With the average amount saved by remortgaging sitting at £439, this equates to £3.4billion nationwide.
The research found that of the three in five borrowers across the UK on a fixed term deal, one in six have no idea what will happen to their repayments once their fixed-term period comes to an end.
Among 18-24-year olds, almost four in five of whom are on fixed term deals, 20 per cent are unsure of their repayments once the fixed term ends. Despite this, 60 per cent of those in the 18-24 age bracket noted they are in fact planning on applying for a new mortgage within the next two years.
It is best to seek advice when looking for available deals and remortgaging is far simpler than getting a mortgage when buying or selling, especially if you’re able to switch to a better deal with your existing provider. For further information on how we can help or to arrange a meeting, contact us on 0289 260 5088 or email firstname.lastname@example.org.
YOUR HOME MAY BE REPOSSESSED IF YOU DO NOT KEEP UP REPAYMENTS ON A MORTGAGE OR OTHER LOANS SECURED ON IT.