The drop in mortgage rates has been helping homebuyers of all kinds in recent months, but arguably, it's remortgagors who could reap the greatest rewards – being able to switch to a lower mortgage rate could allow them to stay in the home they love while saving huge amounts of cash, and research from LMS reveals just how much they're benefiting.
The research found that 11% of those who remortgaged to reduce their repayments in August were able to save more than £500 every single month, equating to at least £6,000 per year – almost a quarter of the average UK salary. The proportion of people benefiting by this extent is on the rise, too: not only is it the highest proportion seen so far this year, but it's up from 9% who were able to save more than £500 in July, and from 7% in June.
This huge financial boost needn't be difficult to achieve, either: a combination of falling mortgage rates (thanks to the base rate cut) and increased equity (thanks to higher house prices) means that people can move down the loan-to-value (LTV) scale and get much lower rates than they anticipated, giving their finances a welcome top-up in the process.
All that extra cash can be put to good use, too, perhaps by topping up a savings pot, paying down other debts, or simply having more spending power from month-to-month. Just think how much further your salary would go with an extra £500 every month! That's a definite disposable income boost.
Time to take the plunge?
LMS's survey revealed that reaching the end of a fixed rate mortgage deal is understandably spurring people on to remortgage, with 55% of homeowners who remortgaged in August doing so because they had come to the end of their current deal. The thought of going from a low-rate deal to a far higher standard variable rate (SVR) is the fuel that many need to take the plunge and remortgage, and although the motivation to do so is arguably receding, it could still lead to huge cost benefits.
Those who are already on their lender's SVR could save even more – the current average stands at 4.71%, but considering the average two-year fixed mortgage rate is just 2.44%, it makes sense to compare your options. Remember, too, that these are just averages, with it actually being possible to snap up a two-year deal at just 0.99%! So what are you waiting for? Compare the top mortgage and remortgage deals to see if you can benefit from record low rates – and perhaps save a small fortune in the process.
Disclaimer: Information is correct as of the date of publication (shown at the top of this article). Any products featured may be withdrawn by their provider or changed at any time.
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