Almost half a million homeowners coming off five-year fixed rate mortgage deals taken out in 2020 could see a major spike in their monthly mortgage repayments.
These borrowers have been paying an average interest rate of just 2.11%. However, if they revert to their lender’s standard variable rate (currently averaging 7.13%) when their deal comes to an end, their monthly repayments could soar to £1,227 on average, a jump of £510 a month or another £6,000 a year.
Although rates have eased from recent peaks, they remain higher than the ultra-low levels seen during the pandemic. Borrowers who secured low-cost deals in 2020 are likely to face a payment shock. As a result, we advise shopping around, with our help, rather than automatically switching to your lender’s standard variable rate. Locking in a new five-year fixed rate at 4.33% could save over £3,600 a year, while a two-year fix at 4.6% could save around £3,290.
It’s important to review your options early. Many lenders allow borrowers to secure a new deal up to six months in advance, helping to avoid last-minute panic and potentially saving thousands in the process.
Your home may be repossessed if you do not keep up repayments on your mortgage
Source:
https://www.yourmoney.com/mortgages/remortgage/nearly-half-a-million-homeowners-could-see-substantial-increase-in-monthly-mortgage-payments/