Are you overpaying on your mortgage interest?

Photo by Tierra Mallorca on Unsplash
Nearly a third of mortgage holders are sitting on their lender’s standard variable rates (SVR), according to research from L&C Mortgages (FT Adviser), meaning that many households are unnecessarily and often, unknowingly, overpaying interest on their mortgage. Costing you hundreds of pounds every month.
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As interest rates have been low for some time, mortgage interest rates are historically low and by not remortgaging you lose out of this benefit. You also could be overpaying on your mortgage interest by hundreds of pounds a month.

With interest rates being low for some time, mortgage interest rates are historically low, meaning it often pays to switch mortgages to keep on a low deal. By doing this you could save on unnecessary interest payments as SVRs can be three times as high as their fixed-rate on a standard two-year fixed mortgage (Source: Know Your Money). With a recent study showing that homeowners who switch from their lender’s SVR can save an average of £4,500 per year (FT Adviser), equating to £375 every month.

Here’s why it often pays to speak to a mortgage broker who’ll be able to source the most suitable mortgage for you at that time and be on hand to make sure you remortgage before you are automatically reverted to the SVR at the end of your initial term.

What’s more is when you do go to remortgage, if on a repayment mortgage, you will have built up more equity in your property meaning that it is likely that you will have access to better mortgage rates as you benefit from higher equity in the property. A win-win.

However, you do need to be aware of the costs involved if you choose to extend your mortgage term as you’ll be increasing the amount of interest paid. Additionally, some lenders will have fees associated with their mortgages.

Speak to a mortgage adviser who’ll be able to talk you through the positives and negatives of remortgaging as most of the time they should be able to find a better cost-effective mortgage solution.

Ideally, you should be look to remortgage four months prior to your initial term is up. Speak to us on to book a free initial appointment.