Research from Alexander Hall found that homeowners who did not secure a new fixed or reduced rate at the end of their mortgage term were likely to pay hundreds more each month.
According to research, two years ago, the average homeowner needed a loan of £217,502 after putting down a 15% deposit on a typical house worth £255,885.
The average rate for a 2-year fixed mortgage at 85% loan-to-value (LTV) was 4.98%, meaning monthly payments came to £1,269.
Alexander Hall said that now, at the end of that 2-year fixed term, the remaining loan would be £208,277.
Research showed that the average mortgage rate has dropped slightly to 4.74%, so locking in a new fixed rate would set monthly payments at £1,241.
This is a saving of £28.33 a month, or £679.92 over two years.
Additionally, the research found that if homeowners did not arrange a new deal and moved to the lender’s standard variable rate (SVR), currently averaging 7.23%, on the same loan, monthly payments would be £1,550.
That is £281.29 more per month compared to the original fixed rate, adding up to £6,750.96 extra over two years.
Stephanie Daley, director of partnerships at Alexander Hall, said: “Nobody wants to pay more than they need to when it comes to the monthly cost of their mortgage, but that’s exactly what could happen if you allow your mortgage to drift onto a standard variable rate.
“That’s why proactivity is key when it comes to renegotiating your terms. Although your current lender may offer you a product transfer offer, this is unlikely to be the most competitive option and doesn’t allow you to make other changes such as altering the overall term or loan amount.
“This is where mortgage advisers come into their own, as they are able to compare products from lenders across the market to ensure you are getting the very best deal for your individual circumstances.”
