This is a call to action. If you’re on a standard variable rate mortgage and you can move to a better deal, then what are you waiting for? It’s time to remortgage – if not now, then in a few weeks’ time.
Here’s why. Currently according to Moneyfacts the typical two year fixed rate mortgage is 2.51% - higher than in April because markets were expecting base rate to go up. Now that this seems unlikely, short term fixed rates should start to fall soon. Five year fixed rate deals are averaging 2.91% at the moment – and unlike two year deals, haven’t changed much.
This means that if you’re on a standard variable rate, it could be a good time to look at remortgaging onto a fixed rate deal. However, the Financial Conduct Authority recently announced that 800,000 mortgage borrowers could switch deals if they wanted but haven’t. Instead, they have kept on their lenders’ standard variable rates for at least six months. If they remortgaged, they could typically save £1,000 a year.
There are some homebuyers who can’t remortgage – including around 30,000 who are on unattractive standard variable rates which are typically 4.6-4.8% - far more than you’d pay on a fixed rate. These people are trapped because they took out their homeloans pre-financial crisis, when the rules on getting a mortgage weren’t as tight as they are now. Additionally, it might not be worth remortgaging if you’ve only got a small outstanding mortgage left as any fees could outweigh the benefits. And if you’re in arrears, then you could find remortgaging hard.
But for everyone else who is on a standard variable rate deal, start looking at moving your deal now. Remortgaging sounds harder than it actually is. Yes, there is some legal input required but it’s minimal and you won’t have to do much legwork – maybe a bit of producing documents and signing stuff. What’s more, lots of lenders will pay the legal fees for you. There are calculators online which allow you to work out if it’s worth your while remortgaging – see Moneysupermarket, London & Country or Money Saving Expert. And check out our guides to mortgages here.