Remortgaging could save homeowners up to £2,300

UK homeowners could save £49 a month on average by remortgaging their property, according to a report from TSB.

Spread across a two-year fixed term mortgage on a £100,000 property, this adds up to a saving of £2,300, the bank added.

Of the 2,000 British homeowners surveyed by TSB in December, a quarter of them said they would remortgage in January. However, one in six said they would not bother because it was too much effort or it hadn’t crossed their mind.

Meanwhile, a third of JAMS surveyed – a term used to refer to those ‘just about managing’ to get by financially each month – intend to remortgage at some point in 2017, with almost nine in ten (88 per cent) doing so in a bid to either free up monthly income, lock in at a fixed rate to better manage their outgoings or to take advantage of low interest rates.

Huge difference

Mortgage payments are usually the heftiest outgoing for many households, said TSB’s director of mortgages Ian Ramsden.

“By remortgaging, homeowners stand to save up to £96 per month on average, which can make a huge difference to family finances,” he said.

“It could mean being able to afford a family holiday, carry out much needed home renovations or simply help ease the pressures on household finances each month.”

However, remortgaging might not suit everyone Mr Ramsden warned, but urged homeowners to explore options to properly understand their situation.

“[Remortgaging] doesn’t have to be complicated or time consuming, so it’s well worth investigating if people are looking for ways to make their finances go further in 2017,” he added.

In 2016, TSB saw a 27.5 per cent uplift in remortgage applications and has helped almost 6,000 people remortgage onto lower rates since the Bank of England lowered the base rate to 0.25 per cent in August of that year.

House prices up

Meanwhile, house prices increased by 6.5 per cent between October and December, compared to the same three months in 2015, with the average UK home selling for £222,484.

Additionally, prices in the last three months were 2.5 per cent higher than in the preceding quarter.

This is according to Halifax’s House Price Index, which also found that the number of mortgage approvals for house purchases were six per cent higher between September and November, compared to the preceding three months. This suggests that home sales could flourish over the coming months.

Martin Ellis, Halifax’s housing economist, said that house prices finished 2016 strongly and he expects increases throughout 2017.

“Slower economic growth, pressure on employment and a squeeze on spending power, together with affordability constraints, are expected to reduce housing demand during 2017,” he commented, adding that house prices are likely to remain around current levels due to an ongoing shortage of property for sale, low levels of housebuilding and exceptionally low interest rates.

Mr Ellis added: “Overall, annual house price growth nationally is most likely expected to slow to one to four per cent by the end of 2017.

“The relatively wide range for the forecast reflects the higher than normal degree of uncertainty regarding the prospects for the UK economy this year.”

By Amy White