A million borrowers lapse onto pricey default rate before remortgaging
This accounts for 12% of the 11 million outstanding mortgages in the UK and an average extra spend of £133.46 a month, according to price comparison site MoneySupermarket.
Some borrowers were oblivious to the extra cost, as a survey of 2,640 remortgage enquirers found 15% did not know they would be switched to an SVR or follow-on rate when their mortgage term ended.
Compared to those who had remortgaged before, this was nearly double that of the 7% who said they were aware their rate would change.
Emma Harvey, consumer affairs spokesperson at MoneySupermarket, said: “Standard variable rates on mortgages are notoriously expensive and with 15% of those remortgaging being unaware of how they work, automatically lapsing onto them is a common and costly financial pitfall.
“Regardless of whether you’re on an SVR mortgage or another type, there could still be significant savings to be made when your initial mortgage deal comes to an end.”
See YourMoney.com’s How to remortgage for more information.