Switching to its two-year fix could save the average homeowner £2,023 a year, says TSB
Remortgaging onto a new fixed-rate deal can save homeowners an average of £169 a month, TSB has calculated.
While interest rates for low-deposit mortgages, often used by first-time buyers, have risen sharply since the pandemic began, those for customers with more than a 40% deposit, such as those remortgaging with a substantial amount of equity in their home, have fallen. Homeowners can take advantage of these lower rates to dramatically reduce their mortgage bills, TSB said.
The bank, the UK’s tenth-largest mortgage lender in 2019, compared its two-year fixed-term rates with standard variable revert rates from nine other major lenders. The latter are the rates onto which banks move homeowners when their initial fixed-term deal ends.
TSB says that switching to its two-year fix, at a rate of 1.34%, could save the average homeowner £2,023 a year. This is based on a £139,043 mortgage over a 22-year term, with a £995 product fee on the loan.
Over the course of TSB’s two-year fix, the average borrower would make 24 monthly repayments of £612.76.
However, despite the huge potential savings of remortgaging, 89% of homeowners aren’t considering it, TSB found.
In a survey of 2,000 homeowners, more than half (51%) reported that they were happy with their current rate. But another 29% said they don’t even know their current mortgage interest rate.
Asked why they haven’t remortgaged, a quarter of survey participants said they’d find the task too stressful. TSB says you can minimise that stress by speaking to your bank or mortgage advisor.
16% of respondents were put off remortgaging by the possibility of ‘unnecessary fees.’ However, TSB points out that, depending on the mortgage you choose, you may not have to pay a fee.