Around four million mortgage holders could save themselves more than £5,000 by switching to a better rate, according to Experian.
Although many lenders have pulled new deals because of the lockdown, Experian said there are still a number of competitive products available for people who want to remortgage to a better rate.
It said, with many households struggling financially because of the coronavirus pandemic, those sitting on their lenders’ standard variable rate (SVR) – the default mortgage people fall into 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 an 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 homeowner switched to a two-year fixed rate of 1.25% the monthly repayments would plummet to £707, which would save them £6,288 a year or £262 per month.
Even with arrangement fees, said Experian, the homeowner would still be better off by £5,289 over the period.
Remortgaging – open for business
Amir Goshtai, Managing Director of Experian Marketplace explained lenders still remained open for business for remortgages. This, he said, presented a real opportunity for homeowners to take advantage of low rates and make a typical saving of more than £3,000.
Experian has developed a remortgaging savings calculator which can help people check to see if they can save money on their mortgage without it impacting their credit score.
Goshtai said: “With so many other worries and stresses at this time, we wanted to make it much simpler for homeowners to find and switch to a better deal to help them with their finances.”
He added: “The market is changing rapidly as lenders review their acceptance criteria and product ranges. This makes it particularly important to plan ahead and allow extra time to complete a remortgage, especially for higher loan-to-value ratios, and to use a broker or eligibility service to help you find the right lender”.
