Despite being more likely to struggle with paying off their mortgage, lower income households are much less likely to remortgage their homes, according to recent analysis by Uswitch.com.
Uswitch surveyed over 2,000 British homeowners on low (£25,000 or less), middle (£25,001 to £45,000) and high (above £45,000) salaries to determine how effectively UK residents on different incomes are switching mortgage deals to reduce the impact of rising interest rates.
The results indicated that the lower a Brits income, the less likely they are to have remortgaged their property, as 62% of low income homeowners have never switched lenders for a better deal, despite over one in four (27%) lacking the security of a fixed rate deal.
Kellie Steed, remortgaging expert at Uswitch.com, advised: “Timing is absolutely essential for homeowners looking to make the most of their remortgage options.
“In the last six months of a deal, it’s possible to lock in a new remortgage deal ready for the end of your existing deal.
“Waiting until the deal has ended may mean missing out on rates that are not available in six months time.
“If, however, rates are more attractive in five or six months’ time, you can always change it – so long as the new one has not yet started.”
The research also found that three in four (74%) of low earners are up-to-date on their payments, but believe they are unable to remortgage.
More than two thirds (68%) say this is because their current plan has not ended, even though waiting until your mortgage term has ended to find another deal may not be the best choice for your finances.
The rising interest rates were named as a key factor preventing homeowners from remortgaging, as 10.91% of low earners, 12.85% of middle earners, and 15.29% of high earners said they had not considered remortgaging due to increased interest rates set.
However, remortgaging could be the more stable alternative for most homeowners.
Steed continued: “Switching to a new deal during periods of high inflation may feel like a mistake, as a new fixed rate deal will likely come with higher rates than previous plans.
“However, with standard variable rates as high as they are at the moment, it’s unlikely that you’ll be in a better position if you let your current deal expire and revert onto that.
She added: “The Office for Budget Responsibility has forecast further interest rate increases over 2023, so homeowners with a fixed rate mortgage ending this year should consider their situation to keep their finances healthy.
“Many may be unsure about the risks of remortgaging, or believe it is not an option available to them, but it is always worth some consideration.
“If you have a lot of questions around your mortgage, or are seeking assistance from a market professional, then it may be worth discussing your situation with a mortgage broker.”
For more information about Uswitch’s analysis, visit: https://www.uswitch.com/mortgages/remortgaging/
