Habito survey reveals lack of understanding around SVRs
More than a quarter (27%) of homeowners are on their lender’s standard variable rate (SVR), according to a survey from Habito, while nearly one in five (18%) did not know if they were on the SVR or not.
Remortgaging dropped 33% in November 2020, compared to February 2020; one in six (17%) of respondents believed that remortgaging meant taking on “more debt” or was something to be done “out of financial necessity.”
The survey found that 6% could not provide any answer to what the term ‘remortgaging’ meant, and 8% believed it to be a different mortgage taken out on the same home.
One in 10 (11%) reported being frightened about lenders scrutinising their finances given the current economic climate.
A further one in 10 did not know what a SVR was, and the same amount believed 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 had not switched, one in 10 said that it was because they did not realise they could get a cheaper deal.
More than half of respondents (54%) identified that remortgaging is typically done to switch to a more competitive interest rate to save money on your repayment.
The survey was based off of the results of 2,000 homeowners.
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.”