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Are your mortgage payments overpriced?

Almost one in five homeowners (19%) are currently on their mortgage lender’s Standard Variable Rate (SVR), potentially overpaying vast amounts on their mortgage loan according to recent research.

The findings also showed that the most popular mortgage among UK homeowners is a 2-5 year fixed rate, with just over a quarter (27%) opting for peace of mind rather than risk future base rate rises. Whilst offset mortgages are one of the best ways to help mitigate against rate rises, awareness of these mortgages is so low that just 4% have them.

The research is the first in a series from moneysupermarket.com called the ‘Mortgage Map’. This aims to highlight patterns and trends within the UK mortgage industry and will be a guide to the UK's mortgage market. The initial survey has produced some interesting findings, most significantly that many people are not making their money work for them with an unacceptable number still on their lender’s SVR despite recent interest rate rises.

Fixed Rate Mortgages

More than half of mortgage payers surveyed (51%) prefer the stability and peace of mind offered by a fixed rate mortgage. The largest percentage of borrowers opting for five-to-10 year fixed rate mortgages are from the South West (25%). More high street mortgage companies are breaking into the longer fixed rate market and there are more longer term deals available than ever before.

Standard Variable Rates (SVR)

Almost one in five UK homeowners are paying their mortgage lenders Standard Variable Rate. As these rates are likely to be at least two per cent above the best rates available, this lack of action to review their mortgages could be costing borrowers hundreds or even thousands the longer it persists.

Tracker Mortgages

Just over ten percent of UK mortgage payers are currently on a tracker mortgage deal. Trackers are still a relatively new product but as awareness of these mortgages improves, there popularity is expected to rise.

Top Tips

TIP #1:
Always check the terms of any credit or loan agreement before completion to ensure you are fully aware of any charges or penalties.

TIP #2:
If you have a credit card balance you can't afford to settle, consider a 0% balance transfer card to save interest for 6, 9 or 12 months. Use the money saved to pay extra off your balance every month.

TIP #3:
Don't apply for more than one loan or credit card at once as you will accumulate multiple credit reference checks on your record.