Remortgaging could save you £1200

Nearly 60pc of home owners say they have never remortgaged outside of moving home, according to Barclays. 

Rising food, energy and petrol bills have left many households grasping at any chance to save money. In fact, nine in 10 of us are trying to reduce our spending by cutting back on purchases.

Yet, many of us fail to realise that it is possible to cut one of our biggest monthly outgoings – the mortgage – and save an average of £1,200 a year, according to a new survey from Barclays.

The bank said that nearly 60pc of home owners say they have never remortgaged outside of moving home, thinking it would save just £10 a month and was not worth the hassle.

With the majority of borrowers living in their homes for an average of more than 16 years, we are potentially missing out on years worth of decreased mortgage payments. In fact, over the next two years, Barclays' data shows UK home owners could save as much as £346m.

David Hollingworth, spokesman for London & Country Mortgages, said that improvements in mortgage products over the past year have meant that there is far greater opportunity for borrowers to make savings on their mortgage by reviewing their deal.

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He said: "Some borrowers have stuck with their lender's standard variable rate [SVR] once their deal has come to an end and some of the very lowest are still very good value."

There is considerable variation in the SVRs available from mortgage providers, with some long-standing borrowers paying as little as 2.5pc, while others face an SVR of 6pc or more.

Mr Hollingworth pointed out that Kent Reliance charges 6.08pc on SVR, while Lloyds increased the standard variable rate for Bank of Scotland only this week, lifting it from 4.84pc to 4.95pc. So shaving a couple of per cent off your mortgage will mean a significant monthly saving.

Andy Gray, head of mortgages at Barclays, said: "There are an increasing number of good mortgage deals to be had, so we are urging home owners to act now and look at the rate they are paying to allow them to get more out of their hard-earned cash."

Many borrowers who are looking to remortgage are faced with the dilemma of whether to stick with their current provider or move to a fix, since interest rates were cut to unprecedented levels by the Bank of England.

However, given that no one knows when rates will start rising or how high they will go, how can borrowers decide whether they would be better off switching? And if they do decide to switch, is now the time to do so?

Although existing variable-rate loans may be very attractive at present, home owners who opt for monthly mortgage payments could see payments rise steeply when rates go up.

From The Telegraph