Borrowers on a standard variable rate mortgage could save up to £6,530 when remortgaging to a new deal, research released this week suggested.
The Legal & General Mortgage Club found customers switching from a lender’s standard variable rate to a fixed product could save £4,509 over a two-year period and £6,530 over three years.
The mortgage club attributed the figures to the Bank of England’s decision to hold current interest rates and suggested speculation of a rate rise later this year meant now was the time to benefit from a switch to a fixed rate deal.
Legal & General said borrowers already on a standard variable rate or nearing the end of their existing terms could make savings of more than £2,000 a year on monthly mortgage repayments.
Kevin Roberts, director at Legal & General Mortgage Club, said that with rates still close to their historic lows and unlikely to improve further, now was a great time for borrowers to secure a fixed-rate deal on their mortgage.
He added: "These near all-time low rates will not last forever, so any borrowers who are looking to secure a good deal should speak with a mortgage broker now.
"Not only can brokers offer a far wider range of products and options for consumers which they may otherwise not have access to, or the time to find, but their invaluable expertise will be able to help you secure a great deal on your mortgage."
Legal & General's research was based on a current standard variable rate customer, or one about to move to a standard variable rate, deciding to remortgage with a current balance of £150,000 and taking into account UK Finance's April average standard variable rate of 4.14 per cent.
When moving the £150,000 outstanding debt to the average two or three year fixed product with a £999 fee added, Legal and General found savings to be £4,508.88 over two years and £6,530.40 over three years.
Mark Harris, chief executive at mortgage broker SPF Private Clients, said it was vital for clients to stay on top of the rate they are paying.
He said: "Clients should be reviewing options well before the end of their existing mortgage rate, ideally six months before to establish what their existing lender would offer and comparing it with the wider market.
"It is also sensible to review your full financial position to ensure that if you re-mortgage you maximise the benefit and organise all your debt onto the best possible terms.
"It is not always sensible to consolidate short term debt onto a mortgage but if you are planning home improvements an increase to the mortgage will generally be far more effective than taking a second charge loan further down the line."
rachel.addison@ft.com
