Homeowners are being urged to check the interest rate on their mortgage as research by Which? revealed many could be paying over the odds.
A survey by Which? Mortgage Advisers of 3,500 people with mortgages discovered a third did not know the rate they were on and one in four only knew the approximate figure.
Worryingly, a quarter of homeowners were on their mortgage lender’s standard variable rate (SVR) – which is the rate customers who have reached the end of their introductory deal slip onto if they don’t remortgage.
Expensive
SVRs are usually more expensive than other products available. Indeed, the Which? findings revealed borrowers with an average-priced home could end up paying as much as £347 a month more on the SVR, which is an additional £4,000 a year.
In London, where house prices are significantly above the national average, the cost of an SVR mortgage could be as much as £727 more each month or £8,700 a year, said Which?
Yet, 22% of those on an SVR who had been on the same mortgage for five years, said they hadn’t switched because it wasn’t worth the hassle. One in seven claimed they hadn’t thought about it.
And as many as one in four said finding a cheaper deal would not encourage them to switch.
David Blake, principal mortgage adviser at Which? said: “I would urge anyone with a mortgage to check what interest rate you’re on and whether you’re paying more than you need to.
“The remortgage market is highly competitive at the moment, so there’s a good chance that remortgaging will save you money.
“Speaking to an independent mortgage adviser is a great place to start to find out your options.”
The survey also revealed the majority of homeowners (55%) were on fixed-rate mortgages, 10% were on trackers and 5% were borrowing with discount rates.
Regional differences
The research by Which? also revealed homeowners in Wales were the least likely to know their mortgage rate. Only one in five knew the exact figure and 40% had an approximate number.
Londoners, meanwhile, and those aged between 18 and 24, had the best understanding of their mortgage rate. In fact, 80% of Londoners and 74% of the 18 to 24s knew the exact or approximate figures.
