A third of homeowners have been hit with higher mortgage repayments when they moved onto their lender’s standard variable rate, new figures show.
According to uSwitch.com, this is happening due to lenders failing to alert homeowners that their introductory mortgage repayment rate is coming to an end, leaving them vulnerable to higher payments.
Homeowners who move onto the standard variable rate spend on average 21 months on this and pay on average £2,445 in additional repayments.
The data revealed that three in ten (29%) hit by higher repayments didn’t realise their initial deal had come to an end or left it too late to find a better option.
Over four in ten (44%) mortgage holders are not sure or have no idea at all when their current deal is running out. And, almost two fifths (38%) rely on their provider to tell them when to remortgage. Yet many lenders are not providing any help, with only 40% of homeowners saying their mortgage provider let them know in advance that their initial deal period was about to expire.
Even when mortgage holders know when their deal ends, the complicated application process is preventing many from taking action. Despite having been through the process before, 60% of all homeowners say finding a new mortgage deal is stressful, over a third (36%) find the process time consuming and nearly a quarter (24%) find securing a new deal confusing.
Tashema Jackson, money expert at uSwitch.com, said: “Lenders rely on borrower apathy when it comes to mortgages – enticing them in with a competitive introductory rate and counting on them to stay put once the deal is over.
“Too many borrowers are in the dark about when their current mortgage deal ends. There is much more lenders can do to help their customers take control of their mortgage. At the very least, borrowers should be able to bank on their lenders notifying them ahead of time when their introductory period ends.
“Homeowners can also make the most of great mortgage deals on the market by planning ahead. If they know when their initial deal is due to expire, they can often avoid higher repayments by shopping around and comparing fixed or discounted rate products.”
Not to mention if they are self employed and find that is a dirty word in the world of lending. Recently got a 30k mortgage offer from a lender who we already had a £100k mortgage with over 12 years. If you change status or income levels when it comes to deal end be prepared for a shock. Santander for example have long since worked out who is vulnerable on their mortgage book and hiked them into SVR asap with no offer of further deals. I believe the ombudsman calls it fiscal leverage I have anther word for it and it usually involves being arrested.