Reverting to a big six UK lender’s standard variable rates (SVR) could cost homeowners up to £4,080 in additional interest each year, according to new research by Habito.
Despite this, 27% of survey respondents said they were on their lender’s highest possible rate of interest.
In addition, 18% said that they did not know whether they were on their lender’s SVR.
The Bank of England’s most recent data shows that remortgaging dropped 33% in November 2020, compared to February 2020.
Habito believes this is down to the negative connotations associated with the word ‘remortgage’ with 17% of respondents equating it to taking on “more debt” or something to be done “out of financial necessity”.
A further 6% said that they did not know the words meaning at all, while 8% believed it is a different mortgage taken out on the same home.
Furthermore, 11% of respondents reported being frightened about lenders scrutinising their finances given the current economic climate.
One in ten respondents did not know what a SVR is and a further one in ten believe that moving on to this expensive rate will help them pay off more of their mortgage balance quicker.
Of those that knew they were on their SVR, but have not switched, one in ten said that it was because they did not realise they could get a cheaper deal.
Meanwhile, over half (54%) of respondents identified that remortgaging is typically done to switch to a more competitive interest rate to save money on your repayments.
Daniel Hegarty, founder and chief executive of Habito, said: “So many homeowners admit they’re in the dark when it comes to remortgaging.
“But, with the UK likely facing another year of uncertainty, it is more important than ever to ensure you aren’t paying over the odds much on your mortgage.
“We’re on a mission to stamp out mortgage jargon and shed light on meaningful ways people can save money each month.
“If you’re on a 2-year fixed rate, then do make sure you have a regular cycle of refinancing.
“We see remortgaging a bit like switching utility or broadband providers, but with bigger returns.
“There are lots of options for remortgaging out there – whether you’ve been furloughed, have experienced a reduction in income or you’ve taken a mortgage payment holiday, your lender should be open to you doing a product transfer with them.
“To get a whole-of-market view of your options, speak to a free mortgage broker who can advise you on the best course of action, including sorting a product transfer for you.
“And remember, don’t leave things until the last minute, remortgaging can take a few weeks so it’s best to start thinking about switching three to four months before the end of your initial period.”