A significant number of home owners are planning to remortgage in 2017 but research suggests many underestimate the saving they could make.
Some 31% of eligible home owners planning to cash in on low interest rates with 25% looking to do so this month, but the potential savings are being underestimated by nearly half, according to a new report from TSB.
According to the survey the average saving they expected to make from remortgaging their property was estimated at £49 a month compared with an actual average of £96 per month or £2,300 across the life of a two year fixed term on a £100,000 mortgage.
A third of people who classify themselves as only just managing are planning to remortgage in 2017 with the 88% doing so to free up monthly income, to lock in at a fixed rate to better manage their money, or take advantage of the low interest rate environment.
‘Mortgage payments are often the biggest outgoing for many households. By remortgaging, homeowners stand to save up to £96 per month on average, which can make a huge difference to family finances,’ said Ian Ramsden, director of mortgages at TSB.
‘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,’ he added.
The research found that more than a third, 37%, of those surveyed say they would use the extra money to overpay their mortgage payments, with the aim of becoming mortgage free faster.
Some 30% plan to carry out DIY jobs and 21% said they would use the cash for a major home renovation like a loft conversion or extension. These plans include adding more bedrooms for a growing family, creating space for a home office and making their home open plan.
Despite these potential savings, some homeowners remain unaware of the opportunity altogether. The research found 54% aren’t able to correctly identify the Bank of England base rate as 0.25% and 15% of home owners who aren’t considering remortgaging say they won’t be doing so because it’s too much effort or it hasn’t crossed their mind.
‘Remortgaging might not be right for everyone, but it’s important to understand options. It doesn’t have to be complicated or time consuming to remortgage so it’s well worth investigating if people are looking for ways to make their finances go further in 2017,’ added Ramsden.