More than 4m households are throwing away an average of £216 a month by sticking with their mortgage lender’s standard variable rate, so if you’re one of them, it’s time to take action.
Here at L&C Mortgages, we’ve looked into what sort of mortgage deals homeowners are on, how much they owe, and how long they have left to pay off their mortgages, so that we could work out the sorts of savings that could be made on monthly mortgage payments.
Our research* found that over a third (36%) of homeowners are still on standard variable rate mortgages, and could therefore be paying much more than they need to. As these rates are variable, there’s also the risk that they could go up further when interest rates rise, which the Bank of England has hinted could happen.
Talking about the findings, our press spokesperson David Hollingworth said: “It’s worrying to see so many people still on a standard variable rate mortgage as they are not the cheapest rates available. Not only is there a lack of awareness around how much could be saved but worse still a huge number of people have never even tried to remortgage to get a better deal. With the cost of living on the rise and day to day expenses like energy prices soaring, it is hugely concerning to see that people are paying so much more than they should be.”
By switching to a better deal, UK homeowners currently on standard variable rates could potentially save £216 each month or over £2,500 annually - enough for a holiday or a second-hand car. The biggest mortgage over-spenders are in London, our research found, with homeowners in the capital typically paying £266 a month more than they need to. Homeowners in the south of England and the Midlands overspend by an average of £222 a month, while those living in the North pay £201 more a month than they should.
Worryingly, the research found that 3.4m people don’t even know what mortgage rate they are paying, while 1.1m households are wasting £2.78bn collectively by sitting on the wrong mortgage deal.
Hollingworth said: “A mortgage is likely to be someone’s biggest monthly outgoing, and in only a few easy steps they could get a better deal. It’s crucial that homeowners regularly review their mortgage, to see how their rate stacks up against the record low rates that alternative deals currently offer.”
*Research carried out by Opinium Research between 19th December 2016 and 4th January 2017.
• 2005 people responded to the survey
To see how your current rate stacks up against alternative deals, take a look at our mortgage finder.
Are you paying more than you need to for your mortgage?