With everything currently going on in the world around us, the last thing you want to be doing is overpaying for your mortgage.
Though, you may be surprised to hear that many borrowers are indeed overpaying as they remain on their lender’s standard variable rate (SVR). In fact, data from Unbiased shows that as many as 27% of all mortgage holders are on their lender’s SVR.
So, here you can find out exactly why you might end up on your lender’s SVR, and why you should be thinking about switching as soon as possible.
When your mortgage deal expires, you’ll typically be placed on your lender’s SVR
One of the main reasons that so many homeowners are overpaying on their mortgage is because they are sitting on their lender’s SVR.
You usually revert to your lender’s SVR when your fixed-, tracker- or discounted variable-rate deal expires. And, since an SVR is typically more expensive than one of the above deals, many homeowners end up overpaying.
In fact, Money Saving Expert states that around 370,000 borrowers could save £1,250 a year over two years by switching their mortgage from an SVR deal.
The same source reports that around 150,000 of these borrowers could save over £1,000 a year if they switched to a competitive two-year fixed rate.
They also reported that 110,000 of these could save between £500 and £1,000 during this duration, while the other 110,000 could save up to £500 for two years.
So, as you can see, there is money to be saved by switching your mortgage. And in economic conditions such as those we’re seeing today, every bit of money helps.
If you are on your lender’s SVR, or your deal is expiring in the next few months, now’s the time to start thinking about a switch. As you read above, SVRs are typically higher than the fixed-, tracker- or discounted variable-deals available in the marketplace.
This means that sitting on a SVR could mean you end up paying significantly more than if you switched to another deal.
Ideally, you should make the effort to find a new deal even before your current one runs out. Mortgage offers are often valid for between three to six months, and so you could take advantage of a competitive deal now and complete the transaction immediately after your existing deal ends. This means you won’t have to sit on your lender’s SVR for a prolonged period of time.
You may also be surprised to hear that there are other benefits to switching from your lender’s SVR. Continue reading to find out some of the more surprising upsides that escaping the SVR may bring.
As well as saving you money, switching mortgage could bring you some peace of mind
One of the other major downsides of an SVR is the unpredictability that typically comes along with them.
This is because the rates offered by an SVR aren’t set in stone. They can change at the whims of your lender, which can sometimes make it tricky to properly plan out your future.
Besides making it more difficult to budget, there’s a chance that your repayment rates could rise so quickly and unexpectedly that your mortgage payments become difficult to sustain.
If you’re on your lender’s SVR and you want to save money on your mortgage repayments, working with an expert like us can make the process smooth and painless.
Working with a broker is the best and easiest way to find a new deal and make the switch
The first thing you may notice when you first look for a new deal is the sheer volume of different offerings on the market.
In fact, as of 27 September 2022, there were 64 pages of mortgage deals on Money Supermarket’s mortgage comparison service alone.
Rather than navigating this alone, we can scour through the countless different offerings to find the most appropriate deal for you. Better yet, we can access a range of deals that aren’t available directly to you.
That’s why, if you’re looking to find a new mortgage deal and switch from your lender’s SVR rate, working with a mortgage broker like us can lift a weight off your shoulders and make the whole process as stress-free as possible.
Get in touch
Switching mortgage to a new, more competitive, deal can save you a significant amount, and working with a broker can make the entire process simple. Email enquire@london-money.co.uk or call (0207) 808 4120 to find out how we could help you.
Please note
Your home may be repossessed if you do not keep up repayments on a mortgage or other loans secured on it. Think carefully before securing other debts against your home.