The average homeowner moving from a specific mortgage deal onto their mortgage provider’s Standard Variable Rate (SVR) could save more than £2,500 a year in interest payments simply by remortgaging.
SVR is the type of mortgage you’re most likely to revert to at the end of an introductory, fixed rate, discount or tracker deal. The rate you pay on SVR is set by your mortgage lender and doesn’t track the Bank of England Base Rate, which means you might not benefit from interest rate cuts and you could be exposed to interest rate rises. SVRs don’t come with the security of a fixed rate deal and your mortgage lender could choose to increase your rate at any time.
SVRs can also be quite expensive; on average those on SVRs pay an extra £211 a month compared to homeowners on a mortgage deal. This rises to as much as £727 a month in London, where house prices are significantly higher than the average.
On the plus side, SVRs can represent good value when interest rates are low and there are no exit fees. Even so, with a potentially sizeable saving to be made by remortgaging, it’s a wonder that around two million borrowers seem happy to stick with their SVR. Why?
Time to remortgage?
It’s important to regularly review your mortgage, as it can often make sense to transfer to a new deal – or even a different lender. Your decision to transfer will of course depend on your individual circumstances and the current rate you are paying. If your lender plans to increase its SVR, moving onto a new mortgage deal could save you money.
“I can’t be bothered with the hassle of looking for a new deal”
Fair enough, but that’s the point of a mortgage adviser. We’re here to help take the effort out of finding the right deal that could free up money for you to spend on more pleasurable things.
“I hadn’t realised my mortgage deal was ending”
OK… but your lender should have notified you. If we arrange your mortgage that’s something you could rely on us to do. Alternatively, remember to add the end date into your calendar when you’ve taken a new mortgage deal.
“I did get a letter but didn’t really understand what the lender was telling me”
We know that not all lenders go in for Plain English but it pays to pick up the phone if they’re writing to you with something as important as your mortgage.