Paying too much on your mortgage?
A staggering £2.78 billion of interest being paid by people on the wrong mortgage deal...!
This is according to latest research by L&C Mortgages* who have revealed that 36% of UK homeowners are sitting on the Standard Variable Rate.
So when you took out your mortgage there is a good chance that you were given a fixed initial rate deal e.g. 2,3 or 5 years.
At the end of the initial rate you will usually have been switched automatically to the lender’s Standard variable Rate (SVR) of interest. The current average lender SVR is 4.40%...
So this means if you are sitting on a lender SVR you will probably be paying a lot more interest on your mortgage repayments each month than you need to.
Currently 4 million UK homeowners are paying more interest on their mortgage than they need to.
"It’s worrying to see so many people still on a Standard Variable Rate mortgage as they are not the cheapest rates available. Not only is there a lack of awareness around how much could be saved but worse still a huge number of people have never even tried to remortgage to get a better deal." Source: L&C Mortgages
Why do people Remortgage?
The main reason is to keep monthly costs to a minimum. Why pay more interest than you need to.
1. Has your initial mortgage deal come to an end?
The bad news...You will probably be paying unnecessary monthly interest. If you do nothing and the Bank of England increases interest rates your monthly payments will go up.
The good news...On average a UK homeowner could save £216 per month by switching to better mortgage deal
That is a saving of £2,500 annually...!!!*
By switching to a better deal with a different mortgage provider, remortgaging could potentially allow you to benefit from lower interest rates and lower monthly mortgage repayments.
2. Are you looking to raise money?
By remortgaging you may be able to releasing equity in your home.
People often remortgage to provide money for:
- Home improvements
- New Kitchen
- New En-suite bathroom
- New Extension
- Help your child with their own mortgage deposit
- Consolidate other existing debts.
This can be a low cost way of raising money from your home.
2018 set to be a strong year for remortgaging
2018 looks likely to be another strong year for remortgaging after total remortgage lending in the UK topped £65.7 billion in 2016, according to research by conveyancing service provider LMS. This is equal to a 21% year-on-year increase.
LMS chief executive, Andy Knee, said:
“Remortgaging was driven by record low rates throughout the year, enabling homeowners to make substantial savings to their monthly outgoings. Anticipation of interest rate rises in recent months have also encouraged more people to remortgage with many opting to fix for longer.”
The total number of remortgages in 2016 was 384,950, up 15% from 333,400 in 2015. November alone saw 36,850 remortgages, an increase of 21% compared to the previous year. This is also the highest number in a month since July 2009.
This trend is likely to continue into 2018, with nearly a third of eligible homeowners planning to remortgage, as revealed in a survey carried out by TSB. Because interest rates are so low, many homeowners could significantly reduce their monthly outgoings by remortgaging now.
The impact of Brexit is likely to affect the market and could well lead to rising inflation and a squeeze on family finances, making remortgaging to cut monthly repayments an attractive option.
Inflation is on the rise
If you are thinking of remortgaging, it is advisable to do so now as lenders are likely to start raising their rates throughout the year as the full impact of Brexit begins to be felt.
3 Points to consider when remortgaging
- Remortgaging could save you a substantial amount of money on your repayments each month.
- Even if your new mortgage deal takes just a few percent off your current deal, that could add up a significant saving over the life of the mortgage.
- If you are looking to make home improvements or consolidate debts remortgaging your house could be the cheapest way of doing this.
Not sure what to do?
Not sure how much you could save? Use our free calculator today.
*Research carried out by London & Country March 2017
Our Remortgage Service - helping you make the right decision
Why choose our remortgage service?
Fair Mortgages can provide you with a first class remortgage service.
Special features of what we offer include:
- Whole of market service - we cover most UK lenders
- Great Rates - Access to leading market rates
- Exclusive Deals - Access to exclusive remortgage deals not available on high street
- Fast turnaround - call us if you need to move fast!
- Less than perfect credit history? - We have lenders who will take into account previous defaults and missed payments
- Raising additional finance - If you are looking to raise finance we will look at all your finance options as well as remortgaging.
To investigate your remortgage options call our specialist team on 0117 313 7780 or fill in our call back form.
A remortgage is when you replace your existing mortgage with a new one. There are many reasons for remortgaging, but the majority fall into one of the two following categories:
Click here for Remortgage Quotes & Advice »
1. Remortgaging to save money
If you have a fixed rate mortgage deal, your interest rate will usually switch to the lender’s Standard variable Rate (SVR) which is likely to be higher and will probably mean that you have to pay more each month. By switching to a better deal with a different mortgage provider, remortgaging could potentially allow you to benefit from lower interest rates and lower monthly mortgage repayments.
2. Remortgaging to raise money
Remortgaging to release equity in your home. This could be useful if you wanted to carry out repairs to the property, add an extension, help your child with their own mortgage deposit, or consolidate other existing debts.
Even if you are happy with your current mortgage deal, it is often worth keeping a close eye on the mortgage market to ensure that you don’t miss out on potential savings you could make by remortgaging your property.
Points to consider when remortgaging
Done wisely, remortgaging could save you a substantial amount of money on your repayments each monthly. Even if your new mortgage deal takes just a few percent off your current deal, that could add up a significant saving over the life of the mortgage. If you have had the same mortgage deal for several years, it may be worth checking periodically to see if better deals have become available.
If interest rates rise, remortgaging could be an attractive option for those home owners who currently have a tracker mortgage deal. By moving to a fixed rate mortgage deal, borrows can have the security of knowing exactly how much their mortgage payments are going to be each month.
Despite the potential savings, remortgaging is not always the most cost-effective option. One of the most important things to think about before considering remortgaging is the current value of your property in relation to its value when you bought it.
If you are self employed remortgaging may present a number of unexpected challenges depending on how long you have been self employed and the nature of your work and income - speak to our mortgage team for advice on your options.
If your property has dropped in value since you first took out a mortgage on it, you may be in negative equity, which means that you owe more on your mortgage than your house is worth. If you choose to remortgage while in negative equity, you will be required to pay the difference between the existing mortgage and the new mortgage.
Even if you are not in negative equity, remortgaging is still likely to incur various costs which you will need to factor in when considering how much money you will save overall by moving mortgages. Unless your existing mortgage term has come to an end, you are likely to be charges an exit fee in order to switch mortgages. It is therefore worth checking to see if the cost of the exit fee will be balanced out by the savings you make by remortgaging. In addition to potential exit fees, you will also need to budget for the usual costs of property buying, such as arrangement fees, legal fees and valuation costs.
The remortgage process is not as expensive as the process of getting a mortgage in the first place, but it can still amount to a substantial cost and this should be considered carefully before taking the plunge.
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Depending on your circumstances, remortgaging could save you money each month or allow you to release substantial equity in your home.