In addition, over half (56 per cent) of these bought their first property over 20 years ago, during which time Bank Base Rate peaked at a staggering 14.875 per cent in 1989.
Purely calculates that a borrower with a £100,000 interest only mortgage, remortgaging every two years for ten years (thereby getting a deal that is, on average, 1% cheaper than the Standard Variable Rate), would have paid out £10,000 less in interest over the ten year term than someone who has never remortgaged. This figure rises to £20,000 for those who bought over twenty years ago and regularly remortgaged.
Of the 1.6 million people who have failed to remortgage since the 80s, 60 per cent would have taken out endowment mortgages and could potentially be sitting on a shortfall. As Mark Chilton, Chief Executive of Purely Mortgages explains, “The majority of endowment policies were sold in the nineteen-eighties, yet worryingly it is people who bought around this time that have lost most by not remortgaging. These borrowers will not only have paid more for their mortgage than necessary during this period, but may still be facing an endowment shortfall.”
Purely calculations reveal that someone with five years left on a £100,000 interest-only mortgage, currently paying an SVR of 6.75 per cent, remortgaging to the best five year fix for the remainder of the term (currently around 4.80 per cent) will save almost £10,000 in interest payments which they could then use to help make up any potential endowment shortfall.
Chilton adds, “Many of these borrowers may only have five years left on their mortgage and probably think there’s no point remortgaging now, but by remortgaging to the most competitive five year fixed rate deal borrowers could save a further 10 per cent on their loan, which could be all they need to make up any endowment shortfall.”
Findings:
· 2.9million* homeowners who first bought over ten years ago have never remortgaged
· Borrowers facing an endowment shortfall still have time to help themselves
· A staggering 3.6 million (23 per cent) of all homeowners who haven’t remortgaged will only be tempted to remortgage if they move home
· 85 per cent of over fifties will not automatically remortgage
· 1 in 5 (22 per cent) of those that haven’t remortgaged will not remortgage as they are happy with existing lender
