Mortgage warning: 850,000 households could see monthly bills rise by £175 very soon

Raising a deposit for a mortgage is certainly a significant task for many people. However, once a homeowner has bought their home, it doesn’t stop there in terms of mortgages.

READ MORE

• Martin Lewis explains what to do with inheritance money

From variable to fixed, there are a whole host of types of mortgages to choose from.

Research shows it can pay to keep an eye on one’s mortgage outgoings.

For those who opt for a fixed mortgage, when the introductory deal term ends, it may be they roll onto a Standard Variable Rate (SVR) mortgage.

And, this can prove to be costly for some borrowers.

According to comparethemarket.com, homeowners who lapse onto a Standard Variable Rate mortgage are set to pay an extra £2,000 per year in interest.

The price comparison giant explained the act of rolling from a fixed deal onto a SVR could mean monthly costs rise by £175.

What’s more, the website warned that hundreds of thousands of borrowers may need to consider their options sooner, rather than later.

Research has found 10 percent of households on fixed mortgages are to see these deals come to an end in the next six months, comparethemarket.com said in June.

This equates to around 850,000 homes.

Meanwhile, one in 10 (11 percent) have opted to stick with a tracker mortgage due to concerns about meeting lender eligibility criteria, comparethemarket.com said.

Mark Gordon, director of money at comparethemarket.com, said: “Languishing on a lender’s standard variable rate mortgage is likely to cost you thousands of pounds more than you need to pay.

“By remortgaging, the money could instead be put into savings or could be put away in preparation for any emergencies or to build up rainy day funds.”

READ MORE

• Stamp Duty calculator: How to work out how much is owed amid holiday

Speaking last month, Mr Gordon explained that while the coronavirus crisis may have reduced options, there are still deals to look into.

He said: “While there are fewer mortgage products available on the market than usual at the moment, with the housing market slowly restarting again and physical property valuations able to take place once more,  there are still plenty of good rates to choose from by looking around online.”

It’s something which has also been found in research by Trussle.

The mortgage broker has found 800,000 people in the UK could save £4,500 by moving off a SVR.

Miles Robinson, Head of Mortgages at Trussle commented: “It’s clear that the reality of lockdown and the impact on the economy is hitting home for many, making planning for the future and effective saving more important than ever before.

“Hundreds of thousands of homeowners are collectively missing out on billions of pounds by sleepwalking onto an SVR, and it’s a problem we’re passionate to resolve, especially during these tough times.

“We’ve built a remortgage calculator to show homeowners how much they could save by finding a better deal.

“However, remortgaging isn’t a fix all solution and we know that unemployment is something that’s very real for our customers.”

Source: Read Full Article