Mortgages: Expert advises public amidst rising base rates
We use your sign-up to provide content in ways you’ve consented to and to improve our understanding of you. This may include adverts from us and 3rd parties based on our understanding. You can unsubscribe at any time. More info
Research from Experian and L&C Mortgages found that borrowers in the UK could get this lump sum on their mortgage payments if they moved to a new fixed rate two-year offering.
Data from Experian revealed that almost six percent of homeowners may be coming towards the end of their fixed term deal in or over the next three months.
Therefore, there will be a substantial number of people who will need to remortgage in the near future who will be able to pick up this £5,000.
As part of their research, both firms used a hypothetical example as to whether switching mortgage deals would benefit families financially.
In this situation, a homeowner with a £150,000 mortgage loan of 20 years on a lender’s standard variable rate (SVR) of 4.49 percent would have a monthly repayment of £948.16.
The same mortgage on a keen two-year fixed rate remortgage deal of 1.11 percent will have a monthly repayment of £697.23.
This would be an estimated saving of £6,022.32 or £250.93 per month for families who may need the extra cash.
As a result of this, households would get around £5,023.32 over the two-year period, once they took into account the arrangement fee of £999.
James Jones, Head of Consumer Affairs at Experian, explained why this is the perfect deal for households going into 2022.
Mr Jones said: “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.
“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.
“You can get help exploring your options by seeking advice from a fee-free mortgage broker.
“It’s also worth taking a moment to review your credit score and, where possible, make improvements ahead of any formal credit check.”
David Hollingworth, an Associate Director at L&C Mortgages, added: “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.
“Use a mortgage comparison to check whether you are on the cheapest deal, or if money can be saved by using another company’s offer.
“When thinking about the switch remember to factor in any other costs and check if there is an early exit fee associated with your current deal.
“However, shopping around could help to save thousands of pounds over a short period of time.”
Last month, the Bank of England’s Monetary Policy Committee voted to hike the base rate, the lowest interest rate, to 0.25 percent from 0.1 percent.
Source: Read Full Article