Remortgaging at current rates could save homeowners £169 a month – so why are the majority not considering it?
- Switching from variable to fixed rate could save homeowners £2,000 per year
- People say remortgaging is stressful and they are worried about fees
- Almost a third of people do not know what their current interest rate is
- TSB explains common remortgaging fears and why they may be unfounded
Britons could reduce their outgoings by £169 a month if they remortgaged their home at current rates, according to TSB Bank.
It compared its two-year fixed-term rates with standard variable revert rates at nine other major lenders, and found that the average homeowner could save an average £2,023 per year by switching their deal.
Remortgaging with a different lender may save you more – or less – depending on your circumstances, so homeowners should shop around to find the best product.
Visiting a mortgage advisor and switching to a new deal could save homeowners money
TSB’s figure was based on a £139,043 mortgage over a 22-year term, with a £995 product fee added to the loan.
If they took out a new two-year fixed-term mortgage, the buyer would make 24 monthly repayments of £612.76 at a rate of 1.34 per cent.
Since the pandemic mortgage rates have gone both up and down, depending on the type of homeowner seeking them.
First-time buyers and those with little equity have seen rates increase and five and 10 per cent deposit mortgages vanish – but homeowners able to remortgage or buy with 40 per cent equity or deposit have been offered lower rates than they were before Covid struck.
Despite the potential savings associated with remortgaging, TSB found that the majority of people, 89 per cent, were not considering it.
In a survey of 2,000 homeowners, more than half said they were happy with their current rate, while 29 per cent did not know how much they currently paid in interest.
When it came to reasons for not remortgaging, a quarter of people surveyed said they would find the task too stressful.
The cost of remortgaging was also a concern, as 16 per cent said they thought there would be ‘unnecessary fees’ and 15 per cent were worried about early repayment charges.
Nick Smith, head of mortgages at TSB, said: ‘Your mortgage is typically the biggest investment you will ever make, yet it’s not always the first place where homeowners will look when reviewing their finances.
‘Remortgaging might not be right for everyone, but it’s important to take a look at your options, know the amount of interest you’re paying and speaking to your bank or mortgage adviser about any changes that could save you money.’
TSB has responded to some of the common reasons for not wanting to remortgage, issuing the following advice.