Would you let an auto-switching service choose your mortgage?
When it comes to finding the best energy deal, the new automatic switching services, which monitor the market for you and move you to better tariffs, are a sure-fire way to save money. But would you do the same with your mortgage?
Well, new research shows almost a third of borrowers would be happy to sign responsibility over to an auto-switching firm to find them the best mortgage deal.
The study reveals 29% of British borrowers would let a mortgage switching firm move them onto a new home loan without asking.
The number rises to 50% if they could get a second opinion from an independent mortgage broker.
According to the survey by YouGov on behalf of mortgage switching platform, Dashly, 41% of 25 to 34-year-olds would allow a switching firm to move their mortgage on their behalf.
The figure drops to 29% among 35 to 44-year olds, 28% among 45 to 54-year olds and 21% among the over-55s.
The survey also revealed that 30% of borrowers would be happy to continuously share their anonymised, real-time personal financial data with a mortgage platform if, in doing so, it saved them money.
Ross Boyd, founder of Dashly, said: “That almost a third of people would be happy to be automatically switched to a better deal by an online mortgage platform shows the trust that is emerging in new technologies.
“But our firm view is that while automatic switching is perfectly reasonable for, say, a utility bill, advice on something as big and important as a mortgage remains crucial.”
Good reasons to switch
Rachel Springall, finance expert at Moneyfacts, agrees that technology that helps people find a mortgage is a good thing, but says it is still important they seek independent advice to ensure they get the right deal.
She said motivation for borrowers sitting on their lender’s standard variable rate (SVR) to remortgage has never been greater.
“Today, the average two-year fixed rate mortgage stands at 2.48%, but the average SVR is a monstrous 4.89%. This means a borrower could save over £3,000 within the first year of their mortgage (based on a £200,000 mortgage over a 25-year term on a repayment basis) if they switched to an average fixed rate deal,” she said.