Buying a property is a significant purchase, and it can often be the largest buy that a person will make. For some, moving up the ladder on the housing market into a perhaps more expensive pad is the dream.
Once that dream home has been discovered, there’s a lot for those with mortgages to think about.
That said, even those staying put will need to continue paying attention to their mortgage repayments, and the deal they’re on.
The importance has only been emphasised following research from mortgage company Habito, which found remortgaging could be one of the best ways for homeowners to save money in 2021.
Being on one of the big six UK lender’s reversion rates or Standard Variable Rates (SVR) could cost homeowners up to £4,080 in additional interest each year, compared to those lenders’ cheapest deals, the study found.
Remortgaging – meaning switching a mortgage deal – can mean changing to a different lender or staying with a current lender but getting a different rate of interest from them (known as a product transfer).
Daniel Hegarty, founder and CEO of Habito, commented: “So many homeowners admit they’re in the dark when it comes to remortgaging.
“But, with the UK likely facing another year of uncertainty, it is more important than ever to ensure you aren’t paying over the odds much on your mortgage.
“We’re on a mission to stamp out mortgage jargon and shed light on meaningful ways people can save money each month.
“If you’re on a two-year fixed rate, then do make sure you have a regular cycle of refinancing.
“We see remortgaging a bit like switching utility or broadband providers, but with bigger returns.”
Mr Hegarty continued: “There are lots of options for remortgaging out there – whether you’ve been furloughed, have experienced a reduction in income or you’ve taken a mortgage payment holiday, your lender should be open to you doing a product transfer with them.
“To get a whole-of-market view of your options, speak to a free mortgage broker who can advise you on the best course of action, including sorting a product transfer for you.
“And remember, don’t leave things until the last minute, remortgaging can take a few weeks so it’s best to start thinking about switching three to four months before the end of your initial period.”
Habito mortgage expert Will Rhind has shared some insight into saving money when remortgaging – as well as explaining how to get the “best interest rate”.
He said: “To get the best interest rate when remortgaging, firstly, make sure your credit score is the best it can be.
“Secondly, leave yourself plenty of time to speak to your broker before you need to switch.
“And thirdly, watch out for any extra fees associated with the deal.
“To expand on that last point – some mortgages have larger fees – of over £1,499 – which increases the overall price of the mortgage.
“Make sure you look at the total cost, taking into account any associated fees, to get the cheapest deal overall.
“This is something a broker, like Habito, would be able to advise you on.”