Borrowers could save over £5,000 on their mortgage payments by switching to a new fixed rate two-year offer, analysis by Experian and L&C Mortgages has indicated.
The findings highlighted that a homeowner with a £150,000 20-year mortgage loan on a lender’s standard variable rate (SVR) of 4.49% will have a monthly repayment of £948.16. The same mortgage on a keen two-year fixed rate remortgage deal of 1.11%, however, will have a monthly repayment of £697.23.
This would represent a saving of £6,022.32, which would be equal to £250.93 per month.
The research by Experian and L&C Mortgages also took the arrangement fee of £999 into account, and calculated it would still leave a homeowner better off by £5,023.32 over the two-year period.
Further, data from Experian has suggested that almost 6% of homeowners could be coming to the end of their fixed term deal in or over the next three months, and will soon need to remortgage.
“Homeowners may be able to secure substantial savings by switching to a new fixed rate mortgage deal, so we urge anyone with a fix ending soon to look into their options,” commented Experian head of consumer affairs, James Jones.
“Taking no action will mean you lapse onto your lender’s standard rate, which will usually lead to a hike in your monthly payments. With an interest rate rise looming, it would be worthwhile to explore your options now and get a new rate locked in.”
L&C Mortgages associate director, communications, David Hollingworth, added: “As we approach the end of the year, we often see expenses and outgoings increase. And with living costs on the rise, it’s more important than ever for consumers to shop around and find a better deal.
“They could be saving hundreds of pounds a month by switching to a fixed rate mortgage and also protect against an increase in rates. There remain competitive deals on the market, but if expectation of an interest rate rise persists then the deals currently available might not be around for too much longer.”
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