According to a national charity, homeowners who stay with the same lender following the end of a deal, could be losing over £400 a year.
Citizen’s Advice has advised that homeowners who remain on the SVR (Standard Variable Rate) of their lender once a deal has ended, pay on average £439 more a year. An estimate by the charity reveals that 1.2m homeowners would save money by moving to a new deal, with 10% saving over £1,000 with one of the new competitive deals. The chief executive of Citizen’s Advice, Gillian Guy, said:
“Lenders must be more upfront and provide their customers with clear information about what could happen to the cost of their loan once the fixed term period ends.”
CeMAP qualified mortgage advisors are able to provide a clear explanation to clients of how their payments may change once the fixed term deal is completed. Once a deal has ended, interest rates on the SVR may be 2% higher than the previous fixed rate deal, and borrowers often don’t realise that they can switch to a new lender.
The research by the charity revealed that more than half of homeowners on the SVR incorrectly believed that they were paying either less or the same as new customers. People with larger mortgages will lose more by not switching to a better deal. First time buyers may be affected if they remain on the lender’s SVR once a deal has ended. If borrowers are not clear about the terms of their deal, they are advised to seek advice from their lender or a mortgage advisor.
