Remortgaging Is Badly Misunderstood.
Mortgage industry publisher, Mortgage Solutions this week announced that only 33% of Brits associate remortgaging with securing a better rate on their mortgage. This is devastating news to brokers who work hard to promote the potential savings and ease of remortgaging property away from lender’s high cost standard variable rate products.
Mortgage Solutions also revealed, almost half (47%) associate remortgaging with taking on more debt with 35% only remortgaging in order to raise capital to renovate their homes.
The source of the Mortgage Solutions report was research conducted by YouGov on behalf of Habito. It found that UK borrowers could be missing out because of their confusion around the subject.
The YouGov survey also revealed that a significant proportion of mortgage borrowers had not changed their mortgage product for years. Nearly 40% confirmed they had last changed their mortgage over five years ago, with 13% surprisingly, having never done so.
Of the 4,370 adults quizzed as part of the study, 1,084 had a mortgage.
Reasons given for not remortgaging or switching a product in the last three years were because 20% of borrowers thought there would not be any savings to be made. A further 9% believed the process to remortgage was too stressful and complicated while 5% believed that the time spent refinancing a mortgage to not justify the effort..
In the dark
Greg Oxenham, Practice Principle of Cardiff independent mortgage brokers, Mortgage ID said, “the research appears to clearly show that just how poorly the benefits of remortgaging have been explained to borrowers leaving many paying far over the odds at a time when personal incomes are being squeezed.”
He added: “When the Bank of England raises the base rate which has been widely tipped to happen before Christmas the monthly repayments for borrowers on variable, tracker and discount rates will rise for millions of home owners. Many banks are already factoring in the first rise by edging up their variable and tracker rates now so the impact will not appear to be as severe when it comes. The remainder are sure to follow suit soon.
Oxenham also said “the next three weeks might be the last time we will see interest rates this low for years to come.” Homeowners on standard variable rates should contact an independent mortgage broker as soon as possible to check whether it is possible to remortgage now ahead of the rate rise. He said “make sure your broker includes all the lenders, lawyers and broker fees in their quotation so you can be sure it is in your best interest.”
If the figures point to a beneficial saving, leave it to your broker to submit the application and follow it through to completion. A competent broker will make refinancing your loan far simpler than buying your first home and take away all the stress and confusion.