Remortgages: how much will I save by remortgaging?

More than ever before, today’s consumers want value for money.  This is what drives the UK mortgage market and makes it a highly competitive place.  As a result, the savings to be made by shopping about for the best mortgage deals are very real – given that your mortgage tends to be your biggest monthly outgoing.

Mortgages turn a lot of people off.  It’s more exciting to 'buy 1 get 1 free' at the supermarket than save potentially thousands of pounds by organising a remortgage.  Why is that?  Perhaps because the mortgage typically lasts for 25 years so it loses a sense of immediacy, plus it sounds boring, hard work and too much trouble to shop around for a best buy mortgage deal.  So it gets neglected….

It’s time to brush the dust off the paperwork and get excited about the savings to be made by a remortgage.  Rather than thinking of your mortgage as a horrible loan stretching way into the future, think of it as very much in the present – just waiting for you to snatch up a great new mortgage deal.   Here we go:

Mr Smith is currently paying his mortgage lender’s standard variable rate (SVR) of 6.5%.  His mortgage is £100,000 interest-only.  So Mr Smith is paying £542 a month – or £6,500 a year. 

He then decides to remortgage to a better rate of 4.5%.  So now he is paying £375 a month – or £4,500 a year.

Yes – that’s a saving of £167 a month!  Or £2,000 a year!

How is that possible?  Because after Mr Smith’s initial mortgage deal ran out, he was placed by his mortgage lender onto its SVR rate and despite knowing that it wasn’t a competitive deal Mr Smith decided to do something about it some other time…. Several years later, he is still overpaying on his mortgage. 

If you are paying your mortgage lender’s SVR then the chances are that you may well be paying 2% more on your interest rate than you could be paying on a cheaper mortgage.  That 2% (on a £100,000 interest-only mortgage) means an extra £2,000 a year.

Still bored by mortgages?
Then let’s say Mr Smith’s new mortgage deal lasts for 2 years.  So during that period, by remortgaging to his better rate he is saving £4,000 on his mortgage.  He still has another 22 years to go paying his mortgage, which means that if he remortgages at the end of each deal he will save…….. you get the picture.

Think Mr Smith doesn’t exist?  Check out our real life case study of a L&C customer who saved £186 a month with his remortgage.

Interested now?
Then it’s time to do something about it and save money today by remortgaging in 4 easy steps

1) Dig out your mortgage paperwork then phone your mortgage lender and ask if it is prepared to remortgage you to a better deal.  
2) Phone a reputable no-fee broker (see free mortgage advice: our no fee broker policy) like L&C who deals with the whole of the market.  Don’t delay doing this.  As we said above, the mortgage industry is highly competitive and the best mortgage deals run out quickly.  Plus, each day that you postpone calling, the more money you are paying on your old expensive mortgage.
3) Your mortgage adviser can tell you quickly whether you can save money by remortgaging.  Of course, if you do this every time your current mortgage deal runs out then the savings to be made over a lifetime are remarkable.
4) Even if you think you may not be in a position to remortgage – perhaps you cannot afford the initial fees or are tied in by an early repayment charge it is still worth checking your options.  You may be pleasantly surprised.

We hope this has inspired you to save money by organising a remortgage today!

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