Recent figures from Moneyfacts show that the motivation to remortgage has hit its highest level since 2008, and many market watchers think that this trend looks likely to increase over the coming year.
WHY REMORTGAGING CAN MAKE SENSE
When your mortgage deal ends, your lender may automatically move your mortgage to their Standard Variable Rate (SVR), which normally rises and falls in line with the Bank of England base rate.
The average SVR in February of this year stood at 4.56%. Back in February 2015, the average two-year fixed deal was 3.14%. So, this means that borrowers who have reached the end of their deal would see a rise of 1.42% if they reverted to the typical SVR. This is the highest increase recorded since November 2008. By contrast, the average two-year fixed mortgage rate is now around 2.33%, so by remortgaging, the same borrowers could enjoy a reduction of 0.81%, which could represent a welcome drop in outgoings.
A CHANGE OF ATTITUDE IS NEEDED
Interestingly, a study conducted by YouGov, shows that just 28% of those with a mortgage have switched provider to secure a more favourable deal at the end of their fixed-rate deal. By comparison, 50% of people have switched their energy provider to save money. Whilst the saving to be made by switching to a different gas and electricity supplier can be hundreds of pounds, the savings to be made from switching mortgage lenders could amount to thousands of pounds over the term of a typical loan.
There are currently estimated to be around three million people paying their lender’s SVR on their mortgages. So, if you’re one of them, this could be a good time to get some professional help and advice from a mortgage adviser to see if you could switch to a more suitable mortgage deal.
You may have to pay an early repayment charge to your existing lender if you remortgage. Think carefully before securing other debts against your home.
A mortgage is a loan secured against your home or property. Your home or property may be repossessed if you do not keep up repayments on your mortgage or any other debt secured on it.