Homeowners encouraged to shop around to cut £2k from mortgage
HOMEOWNERS can save £2,000 a year by switching to a cheaper mortgage deal – equal to a 7.2 per cent pay rise.
Shop around for a cheaper mortgage
Record low interest rates for more than seven years mean a typical borrower can shave £170 a month off the average home loan by shopping around.
This adds up to a staggering £3.9billion a year nationally, according to analysis of the mortgage market.
It found 1.9million owners – one in six – are caught on the lender’s Standard Variable Rate (SVR) and could save with alternative offers.
Save up to £2k when you shop around
Homeowners on a two-year fixed rate deal could save £171.85 a month, or £2,062.20 over a year, compared to borrowers on the SVR, according to the Legal & General Mortgage Club.
Now is the perfect time to review current deals
Borrowers, described in the report as “continually complacent”, ignore warnings that low rates will not be around for ever.
They pay an average of £792.75 a month but risk paying an extra £681.72 a year every time the SVR increases by 0.5 per cent.
Borrowers who switch from the typical SVR of 4.74 per cent on to a two-year fix of 1.69 per cent, will see monthly payments reduced to £629.74, saving £5,308.80 over the fixed rate term.
Low rates will not be around for ever
Council of Mortgage Lenders - Buy to let market recovering
EU Referendum result could see immediate Interest rise or fall
Jeremy Duncombe, director of Legal & General Mortgage Club, said: “Now is the perfect time to review current deals.”
The Bank of England kept the base rate at 0.5 per cent this week as economists predict it could be cut further if the UK votes to leave the EU next Thursday.
Unicredit’s chief UK economist, Daniel Vernazza, said: “Given the current low rate of inflation we expect the BoE would cut interest rates in the event of a Brexit.”
Staying would see the first rise in November.