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Earlier this week we reported on our finding that motivation to remortgage is increasing, with the gap between the average mortgage rate of two years ago and the current average standard variable rate (SVR) making it a win-win situation. Now, additional research from Yorkshire Building Society reveals just how much people could save by remortgaging, potentially leaving them almost £300 a month better off.
Their analysis focuses on those borrowers who are due to mature for the first time this month – in other words, those who were previously first-time homeowners – revealing that increased house prices mean they can now get a lower mortgage rate, and could see significant savings on their monthly repayments as a result.
For example, a homeowner who initially bought a £200,000 property with a two-year 90% loan-to-value (LTV) mortgage in April 2017 at a rate of 2.04% (one of the deals on offer by Yorkshire Building Society at the time) could now secure a mortgage with a reduced LTV of 85%, thanks to average house prices for first-time buyers increasing by 3% in the last two years. If they then switched to the 1.67% rate currently offered by the mutual, they could save £77 a month in repayments.
Those who took out a five-year deal could potentially save even more – average first-time buyer house prices have risen by 22% since April 2014, meaning borrowers could now have a reduced LTV of 75% and could secure a new rate of 1.93%, resulting in savings of £274 a month. It's important to point out that these figures are purely based on the deals offered by Yorkshire Building Society, too, and borrowers who look elsewhere – such as by taking a look at our mortgage Best Buys – may find they're able to save even more.
"We know it's a busy time for homeowners remortgaging generally, but for those coming to the end of their initial fixed rate term for the first time this month, it's important they understand the value of remortgaging and not reverting to a lender's standard variable rate," said Charles Mungroo, senior mortgage manager at Yorkshire Building Society.
"The savings speak for themselves, but we understand that renewing a home loan for the first time can be daunting. We'd encourage those going through it to do their homework, seek help from a mortgage adviser and don't always assume it's easier or better value to stick with their current lender."
Are you coming to the end of a fixed mortgage term? Now's the time to reconsider your options. Compare the best remortgage deals currently available, or speak to a mortgage broker to find the best deal for your circumstances.
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