UK homeowners risking spending more money by not switching their mortgage
People who buy a home in the UK and do not opt to remortgage when their original fixed-term period comes to an end could be costing themselves hundreds of pounds every year, a new study has found.
According to Citizens Advice, the majority of people who allow their deal to just tick over after the original term ends are spending far more than they have to on their mortgage, but it is a common occurrence, because it's so easy to let it lapse.
The main problem, it said, is that most people do not realise they could actually be saving money by switching to a new deal, and as a result, many don't even think about it. The charity said, on average, people are overspending by as much as £400 per year on their mortgage.
The figure is even more terrifying when it comes to first-time buyers, with the findings showing that newcomers to the market who stick with the same mortgage product beyond their fixed period could be spending more than £1,300 too much every year.
According to Citizens Advice, the over payments come from the fact that mortgage fees are automatically added onto their standard variable rate interest when the initial deal ends. It even went as far as saying that more than 1.2 million people in the UK find themselves in this position, and would be better placed to take their mortgages elsewhere and save money.
"More than a million loyal mortgage customers are being stung with higher interest charges when their fixed deals end. Buying a home is a major life decision and borrowers taking out their first mortgage often spend a great deal of time working out the best option for them," said Citizens Advice chief executive Gillian Guy.
One of the main problems, the charity says, is that people never really know they can save money by switching, with the majority saying their lender never told them this was the case.