Three in four homeowners missing out by not switching mortgages

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Research by YouGov has found that around three quarters of British homeowners are losing on average £2,800 a year by not switching their mortgage to one with a cheaper interest rate, reported in November 2016.

Many people are used to switching energy providers to save around £200 a year, but they could probably save a lot more by shopping around for a cheaper mortgage. An example of possible savings is someone with a £150,000 mortgage over a 25-year period. At a variable rate of 4.5%, the monthly mortgage payments are £833.75. By switching to a 1.74% variable rate mortgage, borrowers could pay £624,16 a month, which is £210 a month lower.

Lack of awareness on how much remortgaging can save could be the reason why around 75% of mortgage holders do not switch mortgages. Another reason is that some people feel that arranging a remortgage is too complicated, or are concerned that they will be charged large fees to change. Leading mortgage brokers point out that they can make the whole process easier, and they will make sure that borrowers find the right mortgage to save as much money as possible.

The cheapest mortgage available are fixed two-year mortgages at interest rates of around 0.99%. These rates are for people that have at least a 40% equity share in their home.

Some residential and commercial mortgage lenders offer incentives to switch, such as free valuations and legal fees. With many mortgages at record low levels, it is a good time to switch.

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