Julia Harris, mortgage analyst at Moneyfacts.co.uk, said that for the majority of people switching to the best deal was the most sensible and financially beneficial option. However, she stated there were borrowers who would find it more expensive to switch lenders than stay on an SVR, even if the new rate was substantially lower.
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Harris said: “Fees can eat away at any possible saving. This typically applies to borrowers who only have a few years remaining on their mortgage, and thus their mortgage balance will be relatively small. Staying put with their existing provider, even if it means paying their SVR could be the best course of action.”
She added that those with small mortgage balances may not realise they are also limited in their lender and product choice. Moneyfacts found fewer than 60 lenders, under half of all current mortgage providers, would consider lending less than £15,000. Of these, many would be restricted to selected products.
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Rod Murdison, proprietor of Murdison & Browning, commented: “I’m sadly finding this is an increasing problem. You can find that once you add up all the fees on a remortgage of both the existing lender and new lender it outweighs the benefit of a lower rate. By far the worst area is buy-to-let. Also, some clients just can’t be bothered with the hassle unless there is a substantial saving.”
