Despite being most homeowners’ largest financial commitment and regular outgoing, the survey revealed that 5.5 million of these people (seven out of ten) have never even considered being unfaithful to their current lender.
Charcol estimates that a conservative 50 per cent of these borrowers are languishing on their lenders’ standard variable rates (SVR) and could easily remortgage. With the SVRs of the top ten lenders currently ranging from 4.74 per cent to 6.1 per cent, (with some smaller lenders at an even higher rate), a switch to a two year discount tracker at a current pay rate of 3 per cent, could save a borrower on a £100k interest-only mortgage between £1,740 and £3,100 a year. Based on the UK average home loan size, homeowners are wasting £7 billion a year.
Ray Boulger, of Charcol, commented: "Whether it’s through lack of either awareness or good advice, or perhaps a case of misplaced loyalty towards a lender who has long-since neglected them, millions of homeowners are squandering thousands of pounds a year. These are the people who will happily shop around for hi-fi’s, holidays and motor insurance, but have never even considered the substantial savings they could save simply by ditching their expensive mortgage deal."
To show people how much they could save, Charcol is offering a free review of people’s mortgage arrangements. The service, Remortgage Check, gives consumers the chance to see how much they could save by switching to a cheaper loan, taking into account redemption penalties and other fees they might have to pay to make this switch.
Boulger said: "A wise first step for borrowers looking to remortgage onto a better rate, would be to check out what their existing lender is prepared to offer. Some lenders will be prepared to offer existing borrowers their new business rates but many won’t. Having established this, borrowers can then compare what is available on the market and have the full choice of products available to them. In the majority of cases, lenders who will offer new business rates may still not be the most competitive."
