Homeowners Encouraged to Remortgage Rather than Risk Paying More on a SVR
Remortgage lenders are according to experts in a “competitive” mode. In the hunt for borrowers, lenders have been competing by offering attractive interest rates as well as incentives associated with remortgages. Because it is perhaps the most advantageous time in years for a homeowner to remortgage, it makes it even more of a priority for lenders to get the eye of homeowners looking to look for a financial opportunity to save money.
Reports have shown that homeowners are keen to remortgage, yet many are still on the fence. That could be ending soon as they realize that when their mortgage term ends they could be moved to their lender’s standard variable rate (SVR). An SVR a year or so ago was not so bad, but now it can be twice as much or even more than a homeowner’s interest rate that mortgaged two years or more ago. In that instance, a remortgage could offer a substantial savings for a homeowner.
In a recent statement, Rachel Springall, finance expert at Moneyfacts, explained saying, “Remortgage customers who locked into a two-year fixed deal at the end of 2018 may have missed out on a cheaper deal, as the average rate continues to decrease, dropping by 0.03 per cent since January to stand at 2.49 per cent today.
“Yet those who waited may now save even more by moving off their SVR and instead locking into a two-year fixed deal. Indeed, based on a £200,000 mortgage over a 25-year term on a repayment mortgage basis, the average monthly repayment on the average two-year fixed rate of 2.49 per cent would cost £896.23.
“When compared to the current average SVR of 4.89 per cent, this would see borrowers save £260.17 per month.”
For those homeowners that are close to having their mortgage deal end, considering a remortgage could be the best course of action. Shopping for a deal will give a homeowner the information necessary to decide whether moving to a risky and perhaps higher SVR is better than the peace of mind found with grabbing a low interest rate remortgage, especially one with a fixed rate that could offer security for years to come.