Remortgage delay costs UK homeowners £53m
A third of UK homeowners slipped onto their lender’s standard variable rate for an average of six weeks in 2017, costing them an additional £371.
The £62 a week extra cost for borrowers on their lender’s expensive default tariff is more than the average weekly shop of £53.20, according to research.
This ‘procrastination penalty’ of £371 each or £53.3m across the UK last year compared to the amount paid once homeowners took out a cheaper fixed rate deal.
According to the research from online mortgage adviser, Dynamo and mortgage broker Countrywide, far too many people are not switching deals in time. But the penalty for 2017 and the amount spent on their lender’s SVR has come down:
Seb McDermott, CEO at Dynamo, said: “We strongly urge mortgage holders to give themselves enough time to find their next remortgage.
“We typically recommend people start their search around four months before their current deal is due to expire. A good mortgage adviser will make life easier for you, guiding you through the end to end process. They are typically able to compare a range of products for you from a wide selection of lenders which can give you the peace of mind that you’re getting the best deal tailored to your own requirements.”
The adviser has launched a mortgage alarm clock where homeowners can sign up to receive an alert six and three months before the mortgage product comes to an end. It will also keep in touch with users to make sure they don’t leave it too late to find a new deal.
Andrew Hagger, founder and director of independent money site, Moneycomms.com, added: “With SVR rates pushing 6% in extreme cases, some people could be paying triple the interest rate they would on a fixed rate – hopefully initiatives such as the Dynamo mortgage alarm clock alert facility will prevent borrowers being subject to such punitive rates. With further interest rate hikes a real possibility, bagging a new mortgage rate sooner rather than later is even more important.”