Homeowners whose fixed rate mortgage deal has ended could save hundreds by just re-mortgaging!
When a fixed mortgage deal ends, you are usually automatically put onto the lender's Standard Variable Rate (SVR), which can cost borrowers more each month in repayments than if they actually re-mortgaged onto a new fixed rate deal.
Here are some examples to show you the savings when switched:-
How much could you save re-mortgaging with 40% equity in your home?
If a homeowner owned 40% equity in their home, they would look for a mortgage deal at 60% Loan to Value (LTV).
• The average SVR currently stands at 4.41%*
• The average two year fixed rate at 60% LTV is 1.67%*
• The average five year fixed rate at 60% LTV is 1.90%*
With a property valued at £250,000, mortgage borrowers looking to re-mortgage at a 60% LTV would be looking to borrow £150,000.
Using a mortgage repayment calculator, you can calculate that if this borrower was on the average SVR on a mortgage term of 20 years, they would be paying £941.70 per month.
If they re-mortgaged onto a two year fixed rate deal at the average rate of 1.67%, this borrower would pay £735.61 per month in repayment, a reduction of £206.09 per month.
If this borrower were to re-mortgage on a five year fixed deal at the average rate of 1.90%, they would pay £751.74 each month in repayment, a reduction of £189.96 per month.
How much you could save re-mortgaging with 25% equity in your home?
Those homeowners who own 25% equity in their home would look for a mortgage deal at 75% LTV.
• With a two year fixed rate average at 75% LTV, which is currently at 2.29%
• With a five year fixed rate average at 75% LTV, which is currently at 2.49%
If your property is valued at £250,000, a homeowner would look to re-mortgage at a 75% LTV, borrowing £187,500.
On the average SVR of 4.41% and a mortgage term of 20 years, repayments on the average SVR would be £1,177.13 per month.
Re-mortgaging onto a two year fixed deal at 75% LTV at the average rate detailed above, repayments would be £974.50 per month.
If the homeowner re-mortgaged onto a five year fixed deal at 75% LTV at the average rate detailed above, it would make their monthly repayments of £992.65, a reduction of £184.48 each month.
How much could you save?
There are many deals available offering rates below the average, which means for some borrowers, bigger savings could be made.
If you speak to a mortgage broker, they’ll be able to give you the best options for your circumstances.
Contact us today for more information or help finding the right mortgage deal for you.
*Moneyfacts.co.uk