As inflation and import costs have risen, shoppers have been hit with bigger bills when… Read more »
Don’t ignore your mortgage, it could cost you!
Getting approved for a mortgage is difficult but even after approval you still need to keep a keen eye on your mortgage.
When you take out a variable rate mortgage, you are usually placed on an introductory rate for a certain period of time. Once this period ends you are placed onto the Standard Variable Rate (SVR) of the mortgage provider.
Research from uSwitch released earlier this year suggests that a third of people fail of spot when the introductory period ends. As a result, they are wasting thousands of pounds per year. The study suggests homeowners spend an average of 21 months on the SVR rate before noticing the increase in payments.
To put it into perspective, uSwitch worked out just how big a jump on monthly costs this is. The average SVR rate across the UK is 4.49% (as of March 2016), this is 2.83% higher than the discounted rate available in the initial period.
This is costing homeowners an average of £2445 in extra payments and has seen one in ten homeowners ending up in debt as a result. It is thought that four in ten people have no idea when their current mortgage deal runs out, relying on the mortgage company to remind them of this.
So what can you do about this?
The best thing you can do to protect yourself from this happening is to keep as up to date as possible with your mortgage. Make a note of payments made and important dates to remember from the day of your mortgage approval, this could save you a lot of time, effort and money in the long run.
This way, you will see exactly when your initial period ends and you can make an appointment with a mortgage broker to look for a new deal more suitable to you.
But there is another reason homeowners aren’t looking for a better mortgage deal.
People are not finding a new mortgage as 60% of people surveyed found hunting for a new deal to be stressful, 33% found it time consuming and 25% found it confusing.
These are worrying statistics that are costing plenty of people across the UK a lot of money annually. If you are struggling to look for a new mortgage deal, there are a few things you can do:
- Research the market – you will be able to see what is available and the criteria you need to meet for each mortgage.
- Read up on all mortgages that you are eligible for – this way, you will be able to make the most informed choice possible.
- Start with comparison sites – you will be able to see a wealth of deals from across the current market which can help you narrow down your search.
- Contact competitive providers for more details – there is nothing wasted by getting in contact with a mortgage provider to find out more about what they can offer you.
- Get in touch with an Independent Financial Adviser (IFA) – they will be able to give you impartial advice and inform you of the best deals on the market currently.
Some people are simply not eligible for a more competitive mortgage deal and are stuck with their SVR.
A lot of people stuck on the SVR rate no longer qualify for a more competitive mortgage. This could be to do with a debt, a rule change or a change in circumstances. Some lenders have tightened up restrictions and eligibility criteria when it comes to their mortgages, particularly on the most competitive deals.
Age limits and affordability are among many ways that lenders are being pickier with the people they sign up to their best deals. By using a broker, you can conduct a wider, more thorough search of the market. Keep in mind that just because one lender has turned you down, it doesn’t mean another isn’t willing to lend to you.
The mortgage market is confusing and scary for many but a few hours of research to find a new deal or amend your current one could save you thousands of pounds.