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  1. How’s your mortgage?

    When looking for a property to buy in Chelmsford it’s important to have your mortgage in place. Moving up, moving down, first-time buyer or seasoned buy to let landlord you need to know how your mortgage is working for you. New data released suggests that many people fail to avoid the traps awaiting borrowers when fixed-rate mortgage deals end.

    Private Finance did some new analysis of mortgage rate data that shows that lender’s on Standard Variable Rate (SVR) could save more than £4,000 in mortgage interest alone over the course of just a couple of years by switching to just two-year fixed deals.

    The study suggests that a typical loan of £173,677 and an average interest rate of 4.39%, will mean that SVR borrowers pay £7,546 in annual interest. But a borrower with the same size loan with a 75% loan-to-value (LTV) two-year fixed rate, at 1.76%, would pay just £3,012 in annual interest.

    The Financial Conduct Authority (FCA) data indicates 2.04 million UK mortgage borrowers with authorised lenders have been on an SVR for six months or more, amounting to a quarter – 25% – of all mortgage borrowers. Private Finance’s analysis demonstrates that if a borrower remains on a typical SVR for the full 25-year term of their loan, they would pay £112,683 in total interest. This represents 65% of their original loan (£173,677).

    Shaun Church, director at Private Finance, said: “Standard variable rates have always been uncompetitive, but with rates falling fast in recent years, the gulf between SVRs and typical mortgage rates is becoming increasingly apparent. Lenders are cashing in on borrowers’ inertia, charging rates that are more than two times the rate they would charge to new customers.

    He adds “Though it is ultimately the borrower’s choice, lenders are making a significant profit by punishing customers for being loyal. The message to borrowers is clear: don’t fall into the SVR trap and always switch to a more competitive deal once your existing mortgage term comes to an end.”

    Your home could be at risk if you do not keep up the repayments.