How much can I save by remortgaging?
It must be remembered that there are costs attached to
remortgaging, outlined on the next page. However, purely
in terms of ongoing monthly expenses, remortgaging has the
potential to slash a lot of money from your outgoings.
Here are a couple of examples:
1. If you are paying a Standard Variable Rate of 7.5 percent
on a 25-year mortgage of £100,000, your monthly outgoings
will be somewhere around the £735 mark, depending on the
discounts that you initially enjoyed.
Switching to a new 25-year tracker mortgage that is currently
charging 5%, your outgoings would immediately fall to a
little over £580. This means you would be cutting your monthly
expenditure by over £150, potentially cutting your outgoings
by £1800 each year.
2. In a more extreme example, the borrower is currently
paying 7.7 percent on a 25-year mortgage of £150,000. If
for some reason this rate had been paid since the start
of the mortgage, the current monthly outgoings would be
around £1125.
If the borrower were able to remortgage on a heavily discounted
two-year fixed rate mortgage charging just 2 percent, then
the current level of repayments would fall to just £635.
Even if the mortgage then reverted to 7.7 percent, this
would still offer potential savings of £490 a month or £11,760
over the two-year fixed rate period. If this money was invested
elsewhere or used to reduce the mortgage debt, it could
be worth considerably more to the individual.
You can use our calculators
to work out what your monthly outgoings will be on any new
mortgage.
