Are You Paying Too Much On Your Mortgage?

May 2020 in the UK is a very strange place. The lockdown in which we all find ourselves is causing a great strain as many worry about the financial future and the mental and physical well-being of families and friends. 

It’s difficult to draw any positives from the situation but it does give some the opportunity to look at household finances and see where savings could possibly be made. For homeowners, one of the first areas to consider reviewing is the mortgage on the family home. According to Experian, around four million mortgage holders could save themselves more than £5000 by switching to a better rate. Although many lenders have withdrawn new deals because of the lockdown, there are still competitive products available for people who want to remortgage to a better rate. With many households struggling financially because of the coronavirus pandemic, those subject to their lenders’ standard variable rate (SVR)- the default mortgage rate people go on to when their initial deal ends- could save themselves a good deal of money by remortgaging.

Experian’s analysis suggests up to 44% of the UK’s 10.8 million mortgages were likely to be on the SVR. These rates are typically more than double the interest rate of the original introductory offer. So, a homeowner who has a £150,000 mortgage of 20 years on the typical SVR of 4.75% would have monthly repayments of £969. If the same homeowner switched to a typical 2-year fixed rate of 1.50% the monthly payments would reduce to £724, which would represent a saving of £245 per month for the first two years.

The mortgage market is changing rapidly as lenders review their criteria and product ranges. This makes it particularly important to plan ahead and allow plenty of time to complete a remortgage. 

If you would like any advice on the article above then please contact Andy Peacock on 07879 610110, email andy@snamortgages.co.uk or visit www.snamortgages.co.uk.

Your home may be repossessed if you do not keep up repayments on your mortgage.