Mortgage warning: act now as rates rise

The amount you’ll be able to save by remortgaging away from your lender’s SVR will depend on the size of your mortgage, and on the rate of your new mortgage deal.

A spokesman for Moneyfacts.co.uk: “The difference between the average SVR and the average two-year fixed rate was 2.06% in December 2021, and over recent months this difference has shrunk to 1.66% as lenders react to a changing economic landscape. However, the motivation to secure a new deal remains clear, as those eligible could still potentially make significant savings, and gain peace of mind with a new fixed deal.”

For example, someone with a £100,000 repayment mortgage with 10 years left to run who is on the average SVR of 4.91% would currently be paying £1,056 a month. However, if they switched to a two year fixed rate deal at 3.25%, their monthly repayments would fall to £977, a saving of £79 a month or £948 over a year. This example does not factor in any arrangement fees.

The bigger your mortgage, the more you’ll be able to save by remortgaging away from your lender’s SVR. If, for example, you have a £175,000 repayment mortgage, again with 10 years left to run, your mortgage payments would cost £1,848 on an SVR of 4.91%. If you remortgaged to the same 3.25% two year fixed rate, your payments would fall to £1,710 a month, a saving of £138 a month, or £1,656 a year.

Remember, however, that there may be costs involved in remortgaging which might affect the amount you can save, such as valuation and legal fees. Find out more about these in our guide How much does it cost to remortgage?

Author: wpadmin

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