Borrowers who switch to a new mortgage deal could make monthly savings of as much as £350 thanks to the introduction of new below-1% deals which have hit the market recently.
With rumours of a ‘mortgage rate war’ on the cards, experts are advising anyone coming to the end of their deal to remortgage while competition is hot.
Data from Moneyfacts.co.uk revealed how the average standard variable rate (SVR) – which is the rate borrowers revert to when their deal ends and they don’t switch – is currently 4.40%.
Yet, someone was coming to the end of a two-year fixed rate deal from 2019 (based on the average two-year fixed rate being 2.49%) could be facing a hike of 1.91% if they now revert to an SVR. This is a monthly payment increase of £204 if they do not secure a new deal.
Looking at it another way – if a borrower had the correct level of equity or enough deposit and their circumstances were right, they could be in a position to consider one of the record-low rate ‘sub-1%’ mortgage deals currently on offer.
Moneyfacts said they could make ‘staggering savings’ compared to staying on their average SVR of over £350 a month.
Eleanor Williams, finance expert at Moneyfacts.co.uk, explained: “While undoubtedly the pandemic has had a polarising impact on many households and their income levels, our research shows that for eligible borrowers, this could be a prime time to consider a new mortgage.
“This is particularly true if a borrower is on an SVR, as the difference in monthly repayment between being on the current lowest directly available fixed rate on our records of 0.91%, compared to the average SVR of 4.40%, could work out over £350 per month, or an eye-watering £8,500 if on the revert rate for 24-months – the typical term of a two-year fixed rate.”
Eleanor added: “It would be wise for borrowers to confirm what options may be available to them for a new mortgage, even if perhaps their existing lender is unable to offer a new deal, as eligibility criteria and requirements vary from lender to lender.
“The support and advice of an independent adviser might find options which could save them significant sums and help to calculate the true cost to uncover the best options for individual circumstances.”
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I have 2 properties to remortgage. Looking for a good deal.