Borrowers cut mortgage payments by switching deals

January 15, 2016 by Brendan

Borrowers

Experts are advising borrowers to switch to a low rate deal to save money on their monthly mortgage repayments before the bargain deals start to disappear.

Once the Bank of England increases the base rate, the Standard Variable Rate (SVR) is also likely to rise, making the extra low deals available right now a thing of the past. A borrower that is paying the SVR could reduce monthly payments by a third if they swapped to a deal which is below 2%.

According to figures released by Yorkshire Building Society, the number of home owners searching for a cheaper deal has doubled this year, in comparison to last year’s figures. The building society has credited the high demand to especially low fixed rate products.

Rachel Springall of Moneyfacts has advised that the deals won’t be available forever and people should start to swap deals as soon as they can to lock into a beneficial low rate. According to Moneyfacts, borrowers who are on a two year fixed rate deal should start to look for a new product.

One mortgage broker, David Hollingworth, says that the mortgage market has changed considerably since many of the fixed rate products were taken out. Although low cost deals are currently plentiful, lenders will apply an affordability test which is far stricter than previously, including a stress test to ensure that a borrower can repay a loan.

The CeMAP training course in London and other cities will include the relevant changes to the market, so that advisers can offer the best advice to potential borrowers.