Mortgage Holders Beware: A Simple Mistake Could Cost You £30,000

As a homeowner, managing your mortgage is crucial to avoid unnecessary expenses. However, a common mistake can cost you a staggering £30,000. In this article, we’ll explore the consequences of neglecting your mortgage deal and provide valuable insights to help you avoid this costly error.

The Cost of Complacency

According to research by Finder.com, nearly a third of homeowners allow their mortgage to slip into a higher rate for at least a month after their fixed-rate deal ends. This oversight can result in an average loss of £300 per month, translating to £3,000 over 10 months. But what if you’re one of the unlucky ones who let it slide for more than a year? You could be looking at an extra £30,000 in interest payments.

Mortgage interest rates can be overwhelming, but staying on top of your deal is crucial.

The Consequences of Procrastination

Let’s put this into perspective. Imagine you’re paying off the average UK house price of £281,913 on a competitive fixed 3-year rate of 5.5%. Your monthly repayment would be £1,361. However, if you fail to remortgage immediately after the initial fixed term, the interest rate would revert to the lender’s standard variable rate, typically around 7.5%. This would increase your monthly repayment to £1,661, resulting in an extra £300 per month.

A mortgage repayment calculator can help you stay on top of your payments.

The Importance of Timely Remortgaging

Liz Edwards, a mortgage expert at Finder.com, emphasizes the importance of setting reminders to avoid this costly mistake. Even if you remember to renew your mortgage, leaving it too late can result in a higher revert rate for a month or two, leading to significant additional costs.

Set a reminder to avoid costly mistakes.

The Bottom Line

Don’t let complacency cost you thousands of pounds. Stay on top of your mortgage deal, and make sure to remortgage in time to avoid the higher revert rate. Remember, a simple mistake can have long-term financial consequences.

Plan ahead to avoid costly mistakes.