It seems our mortgages are so much at the back of our minds that 56% of mortgage holders have no idea what rate they currently pay on their deals. But it is not just those who don’t know what rate they are paying who could be losing out by not reviewing their mortgage!
Of those that do know their rate, fixed rate mortgage holders are currently paying an average rate of 4.63%, however, around two in five (42%) are paying a rate of 5% or higher on their fixed-rate deals.
This compares to one of the best buy rates available at the moment of 2.54%, which could mean a difference of as much as £169 per month on your mortgage payments. The average rate paid by tracker mortgage holders stands at 3.17%, which is more than half as much again than one of the current best buys of 1.99%. This translates into a possible extra cost of £88 per month by not switching to a cheaper deal.
Of course, in making the decision whether to switch to a different type of mortgage or change lenders (or both) it will be important to take into account any fees and penalties (ie redemption/early repayment fees) that may apply, as well as the potential savings on interest over the term of the loan. Seeking advice from a specialist adviser can really pay dividends.
Karen Barrett, chief executive of unbiased.co.uk, said: "If the recent decision by Halifax and RBS to increase their SVR is an indication of the direction of the market then we will see more increases to the rates that consumers are paying on their mortgages – making it more important than ever for people to shop around for a better deal.
"The important thing to remember is that while lending criteria have tightened, not all is lost if you are not the ‘perfect borrower’. High LTV deals may be harder to find but we have seen numerous lenders re-enter the market at the 90% LTV mark. Other factors to consider before you embark on switching your mortgage are redemption charges, mortgage arrangement fees and any other costs associated with mortgages.
"14% of mortgage borrowers now say that because the base rate is so low, they won’t be reviewing their mortgage at the moment, but that could mean they are missing the opportunity to make substantial savings on their mortgage payments. The good news is you don’t have to do the work yourself – a whole of market mortgage adviser will look at the best deals available taking your financial situation into account and help you make the right decision."
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