According to research from LC&C Mortgages, the amount borrowers could be overpaying has increased from £2,159 last year to £2,540 this year as average rates continue to fall.
The broker said that the typical rate offered by top ten lenders for a two-year fixed deal had fallen by 0.47 per and five-year fixed rate had decreased by 0.54 per cent in 12 months.
It added that October would be a pivotal month for the market too, as £29bn worth of deals come to the end of their initial rate and would be due move onto the higher reversionary rate.
The total cost of borrowers not taking action is equivalent to around £490m per year.
L&C Mortgages’ associate director of communications, David Hollingworth, said: “Lender competition is fierce and that has helped drive mortgage rates down to new historic lows over the last 12 months. That’s great news for mortgage borrowers coming to the end of a deal but also underlines just how important it is to shop around for a new deal.
“With other living costs on the rise, it’s important that borrowers keep a tight grip on such a big part of their monthly budget.”
He added: “Although borrowers have arguably never had it so good, it’s not all about headline rate and lender fees and criteria are important considerations in finding the right mortgage deal. With the market changing so rapidly, advice will help homeowners make the most of the rates on offer.”
The broker has launched a series of online tools to help borrowers understand the cost of staying on the SVR as opposed to shopping around.
Borrowers should remortgage sooner rather than later
John Charcol’s product technical manager Nick Morrey said the broker had seen a higher proportion of enquiries for remortgages as opposed to purchases recently, as the stamp duty holiday brought purchases forward to the first half of the year and was now levelling out.
He also noted that September and October were “big remortgage months” as several lenders had end dates for their products on 31 October.
Morrey added: “For borrowers worried about coming off their existing deal this is currently the pretty much the best time ever to be renewing mortgage arrangements. If a deal is coming to an end in the next six months then borrowers should consider comparing what their existing lender will offer to what they can get with a new lender keen to attract their business.
“If remortgaging is the best option they submit an application now with many lenders, which will secure that product. Care should be taken that the lender chosen will have an offer valid for six months to encompass the end date of their existing mortgage deal – you don’t want to be paying penalties for leaving early.”
He said if rates did rise from their current historic levels then borrowers would be grateful to get their application in earlier, and if they fell further they could switch to the newer low rate.
“It is a kind of ‘heads you, win tails you win’ scenario. In order to have a smooth remortgage process I would recommend borrowers talk to an independent whole of market broker and have their documentation prepared up front, and be ready for the remortgage questionnaire from the appointed conveyancers,” he added.