L&C Mortgages has reported that 36% of homeowners (equating to four million people) are still on a Standard Variable Rate mortgage (SVR) and a further 1.1 million households are wasting £2.78 billion by sitting on the wrong mortgage deal.
L&C analysed both external research and internal data which examined the type of mortgage deals homeowners are on, their outstanding loan size and the remaining term before identifying a potentially better rate to calculate the savings they could make on their monthly mortgage payments.
The mortgage adviser found that by switching to a better deal, UK homeowners can save £216 each month or over £2,500 annually. However, 58% have never re-mortgaged to save money. In addition, L&C discovered that 3.4 million households don’t know the current interest rate of their mortgage, highlighting just how many people could be paying over the odds.
David Hollingworth (pictured) from L&C Mortgages 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. On top of this, our research shows that while homeowners believe they are paying too much for their mortgage they still aren’t taking action to cut their monthly payments.
“Not only have we found over a third (36%) of homeowners are on their bank or building society’s standard variable rate, but 3.4 million people don’t know their mortgage rate – the chances are they could potentially save hundreds or even thousands of pounds a year by re-mortgaging to a new deal.”
L&C also looked into the UK regions who are overpaying the most and unsurprisingly London tops the table with an average monthly overspend of £266. The south of England and the Midlands collectively overspend by an average of £222 and the North is paying £201 more than they should be.
|Region||Average Monthly Saving||Average Annual Saving|
|North of England||£201||£2,406|
|South of England||£222||£2,669|
Source: Opinium research and L&C Mortgage’s analysis of data December 2016
L&C’s research shows that the average pre-tax income for households with a mortgage is £45,141 and households are paying an average of £597 per month. However, 38% of mortgage holders can’t imagine a time not having to pay their mortgage.
Hollingworth added: “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.”
This post is shared courtesy of Best Advice