Research from Legal and General Mortgage Club showed UK borrowers who have seen their income fall due to the Covid-19 crisis could soon pay thousands of pounds more in monthly repayments with one in three borrowers fearful of remortgaging and exposing their finances to affordability checks.
This could impact over 700,000 borrowers who will reach the end of their two and five-year residential fixed-rate mortgages in 2021.
More than half of borrowers who have seen their income reduced as a result of the crisis are concerned that lenders will now be scrutinising their finances in more depth compared to pre-Covid levels.
Half are concerned their decision to take a payment ‘holiday’ will affect their future mortgage options, and two thirds believe it will be harder to get a mortgage when furloughed.
The research showed moving onto a lender’s SVR of 4.1 per cent could increase annual mortgage repayments by more than £2,500 when compared to borrowers on the average two-year fixed rate at 2.65 per cent on a 90 per cent loan to value product.
Meanwhile, 52 per cent of those who plan to move deals say they are likely to stick with their current lender, with over a third of those saying this is the easiest way to secure a new deal.
Kevin Roberts, director of Legal & General Mortgage Club (pictured) said with many people already financially challenged finding value is more critical than ever.
“There are still thousands of great fixed rate-deals available, including furlough-friendly mortgages for those who have or continue to draw support from the government’s Job Retention Scheme.
“The UK also has a thriving specialist lending sector designed to help borrowers with complex circumstances, from the self-employed to those who might have experienced a credit blip, many of whom can only be accessed through speaking with an independent adviser who could help these borrowers to save thousands of pounds in their mortgage repayments,” he added.