Remortgaging can cost more than you think
Posted: 04 Sep 2006 13:10:24 GMT
New research suggests that people who remortgage regularly could be paying nearly £14,000 too much.
The upfront cost of remortgaging can be £1,100 and homeowners who switch frequently could pay around £13,596 more than necessary, through fees and hidden costs, according to Abbey.
Jeff Scott, Abbey's head of mortgages, stated: "Remortgaging can save a borrower a significant amount of money in monthly mortgage payments, but it is important to consider all the fees and charges involved, not just the headline mortgage rate.
"The average cost of remortgaging could be £1,100, so a new rate would have to be more than 0.8 per cent cheaper over two years in order to balance out that cost."
Therefore remortgaging regularly can result in homeowners being worse off than with previous deals. Remortgaging less frequently and waiting for a package that suits better is recommended.
"People should therefore consider mortgage deals with no upfront fees to reduce costs, or consider switching to mortgage with a lifetime rate so that they don't have to remortgage again," Mr Scott added.
The study showed that 65 per cent of mortgage holders would consider remortgaging and 52 per cent had done so in the last five years.