Martin Lewis compares paying mortgage over investing in savings
Home-owning Britons could reduce household outgoings by an average of £169 per month by remortgaging to a fixed-rate product at today’s rate, according to new research by TSB. This works out at an average saving of £2,028 per year.
However, it seems it’s not something which many people have been thinking about.
The majority (89 percent) haven’t considered this option, a survey of more than 2,000 homeowners who have a mortgage in the UK found.
It found 84 percent of homeowners state their mortgage is their biggest monthly outgoing, yet 29 percent aren’t aware of how much they pay in interest each month.
Despite 70 percent saying they want to get a better handle on their money in 2021, just one in 10 (11 percent) have considered remortgaging as a way to improve finances.
Some homeowners are put off remortgaging, the survey found, with more than half (51 percent) saying they are happy with their current rate.
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Of those asked, 16 percent said they thought there is “unnecessary fees involved” with remortgaging.
Meanwhile, 15 percent think they cannot remortgage because of early repayment charges.
A quarter (15 percent) of homeowners said they would find the task too stressful or daunting (12 percent).
Nick Smith, Head of Mortgages at TSB, said: “Your mortgage is typically the biggest investment you will ever make, yet it’s not always the first place where homeowners will look when reviewing their finances.
“Remortgaging might not be right for everyone, but it’s important to take a look at your options, know the amount of interest you’re paying and speaking to your Bank or mortgage adviser about any changes that could save you money.”
In the hopes of clearing up some common misconceptions, TSB has busted a number of myths which may be stopping homeowners from seeking a better deal.
Myth 1: It’s daunting or too stressful
“A quarter (25 percent) of homeowners say they are put off remortgaging as they ‘find the task daunting’ or ‘stressful’ – remortgaging can be scary. However, by speaking to your bank or a mortgage adviser, they can make the process as easy and seamless as possible.
“TSB has mortgage advisors that can walk customers through all potential options and are happy to answer any questions,” the bank said.
Myth 2: Happy with their current rate
“More than half (51 percent) of homeowners said that they aren’t considering remortgaging because they are ‘happy with their current rate’.
“However, our research shows with a potential £2,000 annual saving, it is always worth shopping around to check you have the best deal.”
Myth 3: Unnecessary fees
“16 percent of homeowners are ‘concerned about unnecessary fees’. However, you won’t necessarily have to pay a fee as this will depend on the mortgage you choose.
“Speak to your mortgage adviser or broker who will be able to share what, if any, fees will apply.”
Myth 4: Locked in
“15 percent say they think they can’t remortgage now because of Early Repayment Charges (ERCs) – but with very low interest rates it may still be worth considering paying an ERC.
“A mortgage broker could advise whether it makes sense to pay to leave your current deal early to lock into a new low rate.
Myth 5: Takes too long and not sure where to look for a new deal
“14 percent of Brits say that remortgaging takes too long and they wouldn’t know where to look for a new deal.
“Navigating through different mortgage deals can feel overwhelming but there are many sources available to help.
“Look online for the mortgages and speak to a mortgage advisor or broker to help finding the best deal for you.
“TSB mortgage advisors on average will spend an hour with customers – a small amount of time if this could save thousands of pounds.”
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