Biggest Mortgage Mistake - SVR
February 15th, 2008 | by admin |The simplest yet most common mistake of any mortgage holder is to stay on a mortgage lenders SVR. Standard Variable Rate.
A Standard Variable Rate would be better called. ‘Our most expensive form of mortgage’. If you look at any of the big mortgage lenders, you will see that they have a range of mortgage products which offer a more competitive rate than their SVR. It might be worth asking why mortgage lenders do this. The reason is that when people are taking out a mortgage they are looking for the most competitive rate. Therefore, mortgage lenders offer special deals to new customers such as tracker mortgages or fixed rate deals. However, these only last for 2-5 years. After the introductory period the mortgage rate defers to the standard variable rate. Therefore, long standing customers can end up paying much more than new customers. The banks are merely taking advantage of consumer inertia to make a bigger profit margin.
How To Avoid this Mistake
It is fairly easy and painless to avoid this basic mistake. At the end of your mortgage term renegotiate a new mortgage deal with your existing bank or move your mortgage to another company. True it might take an hours or so. But, if moving your mortgage saves you £100 a month, it would be a shame not to take advantage.
It is estimated that a significant % of households are stuck on their mortgage lenders Standard Variable rate. Don’t throw money down the drain remortgage to day.