Switching mortgages could save you thousands

11 April 2005
Mortgage holders with standard variable rate (SVR) mortgages could stand to save at least £1,200 in the first year if they switch to a fixed or variable discounted mortgage.

This is the opinion put forward by national estate agent Your Move, which proclaims the benefits of remortgaging.

According to the Council of Mortgage Lenders, remortgaging has grown significantly in popularity over the last decade. Accounting for just 16 per cent of total mortgages in 1993, remortgages grew to 45 per cent in 2003 before falling slightly to 42 per cent in 2004.

"The benefits of remortgaging are high, not only in the first year after remortgaging but potentially over the full-term of the loan," said Jon Round, a remortgage analyst at Your Move.

Mr Round stated that a £100,000 SVR mortgage switched to a two-year discounted variable rate could save the borrower £1,740 in the first year alone. Those who switched to three or five year discounted rates saved less in the first year but significantly more over time.

A borrower opting for a discounted variable rate mortgage could stand to save the most according to Mr Round: £6,692 over three years and £10,655 over five years.

James Cotton, a mortgage specialist with independent broker London & Country, pointed out that borrowers need not switch lenders to enjoy the benefits of remortgaging.

"Many lenders will have discounted rates and base rate trackers for the life of the mortgage that are lower than their own SVR. You can get a tracker starting about half a percent above base rate for the term of the mortgage," Mr Cotton told Reuters.

Click here to find out more about remortgaging.

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