Are you paying your lender’s variable rate?

According to research done by an online mortgage broker in January this year, more than 27% of the UK’s homeowners with mortgages are paying their lenders standard variable rate. This is the lender’s 'default' interest rate which buyers drop on to when the initial term of their arranged mortgage deal ends. This means that more than 1 in 4 of you are paying too much for your mortgage and in many cases, this will mean paying anything up to 6.5% on your mortgage balance outstanding.

Approximately 1 in 5 people did not even know if they were paying their lenders variable rate. This is obviously concerning, and more so when some of these people thought they were paying off their mortgage quicker as their payments were now higher. In fact, the additional payment is paying the additional interest due to the higher interest rate being charged.

So, we must ask, “Why are people paying these higher rates, not doing anything about it?”

Many are under the misconception that remortgaging is something that you only do out of financial necessity or believes it means taking on more debt. Others are worried about their finances being scrutinized especially if their income has been affected or worse still, they are now unemployed through redundancy.

What should you do?

Whether you are on a reduced income since taking your mortgage, have a current deal which is due to finish in the next 6 months or think you are not going to be eligible to get a better rate on your mortgage, speak to your mortgage adviser. There are lots of options available that we will go through with you, and we will tailor our recommendation to your specific circumstances. There is no need for anyone to be paying the lenders standard variable rate. With rising inflation and energy costs we are all looking to save money wherever we can, so please don’t leave what is likely to be your biggest debt on a rate of interest that is much higher than need be. The only person gaining in these circumstances is the mortgage lender when you could have this money in your own pockets.

If you are currently paying your lenders standard variable rate or have a deal that is due to finish in the next 6 months, then get in touch with us here or on 01702 746811 where one of our advisers will be able to go through options with you and ultimately save you money.

Photo courtesy of Canva May 2022