Could 1.4 million households be on the wrong mortgage deal?

Could 1.4 million households be on the wrong mortgage deal?
4.2 million people said they cannot imagine a time when they will not be paying their mortgage

A new report from L&C Mortgages has revealed that 1.4 million UK households are struggling to pay their mortgage and 2.6 million people think their monthly mortgage payments are too high – but are they on the right deal?

According to the findings, 58% have never remortgaged for a better deal, as highlighted in L&C’s ongoing campaign to get homeowners to save as much as they possibly can by shopping around.  In an aim to combat worries about being able to cover monthly payments, 2.5 million admitted they have been forced to make significant cutbacks to reduce their spending in order to afford their mortgage payments.

The news comes as cash strapped consumers are already having to cope with rising food and energy bills, and a hike in the cost of living generally. In fact, many are ‘just about managing’ to live.

A lifetime of paying?

Another shocking find is that 4.2 million people said they cannot imagine a time when they will not be paying their mortgage, further highlighting that people feel overwhelmed by their monthly payments and cannot see a light at the end of the tunnel.

L&C’s data shows that on top of worrying about the cost of their mortgage, the nation has an average debt of £10,048 across overdrafts, student loans and on credit cards. This number rises to an average of £12,992 when looking at those aged between 18 and 34, which could present a real problem for those trying to get a first foot on the property ladder.


And worryingly L&C also revealed that over a third (36%) of homeowners are still on a Standard Variable Rate mortgage (SVR).  Not only are these rates typically higher but if interest rates rise, the 4 million5 people who are on SVR mortgages could see their payments go up even more. This research also highlights that 1.1 million6 households are wasting £2.78billion7 by sitting on the wrong mortgage deal.

David Hollingworth from L&C Mortgages said: “The fact that people have been making cuts in order to cover mortgage payments indicates how people feel they are ‘just about managing’ in many aspects of their lives.

We know that British households last year ran down their savings to a record low*  and that the cost of basics such as energy and the weekly shop are continuing to rise – so it’s no wonder that people are feeling the pressure when it comes to their monthly mortgage payments.  The problem is that although people feel they are struggling, they are not taking steps to manage their mortgage.  Our research has found that millions are sitting on the wrong deal, even though seeking advice could potentially save consumers some hard earned cash by getting a better deal - and even enable them to pay off their mortgage more quickly”.

A light at the end of the tunnel?

L&C also looked at the average time it would take people to pay off the existing balance on their mortgage across the UK. The research found that despite homeowners feeling as though they’ll be paying their mortgage off forever, the end could actually be in sight for many. The average household expects to pay off their current mortgage in 13 years. In fact, when looking at the data across the different regions, the outlook is positive, with half of the UK potentially paying off their mortgage in just over a decade.  Unsurprisingly, Londoners are looking at the longest amount of time left to repay, with the research finding that on average people in the capital are looking at a 16 year remaining term until their mortgage is paid off.

Hollingworth concluded: “It is really important that people keep on top of their mortgage and take control of their monthly payments by using the current low in mortgage rates to their advantage.  It is always worth seeking advice to make sure you are on the best deal and see if there is anything that can be done to relieve the stress of managing high payments. Always ask – could I be on a better deal?”

Join our mailing list:

Leave a comment



Latest Comments

Tom Allen
Tom Allen 20 Sep 2017

Absolutely agree with you!

view article
RyanGeo
RyanGeo 18 Sep 2017

A sharp correction would be a less dramatic expression to use. That is already underway in certain sectors in Reading where I practice as Chartered Surveyor

view article
sean benton
sean benton 01 Sep 2017

Identity theft is a thread for any profession. So,people should stay alarmed. I once take help from a letting agent and came to know that letting agents are taking every precaution to prevent fraudulent...

view article
Mark N.
Mark N. 30 Aug 2017

We have seen a surge in instructions over August and that should continue into September too.

view article
Chris
Chris 30 Aug 2017

Unfortunately, all the legislation bears its force on Landlords and ignores, naively, the effect of Rogue Tenants on the ability of landlords to keep houses in repair and offer properties for rent at reasonable...

view article
Christian Donovan
Christian Donovan 18 Aug 2017

The write-down on house values, combined with the fall in the GBP saddled the fund?s property portfolio with a 1.4% loss in the second quarter. The shocking amount of $240 million.

view article
Samantha Goodman
Samantha Goodman 11 Aug 2017

Interesting point of view.

view article
Samantha Goodman
Samantha Goodman 11 Aug 2017

It depends on the people, some older adults decide to make a long-distance move in order to live closer to their children or settle in a place with a lower cost of living.

view article
brandonlee10
brandonlee10 24 Jul 2017

The financial ramifications of the triggering of Article 50, the starting gun for Britain's departure from the EU, are far from clear. Buyers will be most cautious in London, given that buying a home in...

view article
IrisJ.
IrisJ. 19 Jul 2017

Great advice, but may I also add that when buying an already built home, make sure you do all of the proper inspections. Most importantly pest inspection because people tend to get surprised when they

view article
IrisJ.
IrisJ. 17 Jul 2017

The third point is, in my opinion, the most important one. People have become too inconsiderate and careless when it comes to rented properties. If a landlord wants to protect their property, regular visits...

view article
cornishalan
cornishalan 10 Jul 2017

Added to the cost of purchasing these village properties are the above average maintenance costs. Particularly where the property is a listed building or requires specialist building skills such as thatching...

view article

Related stories

More articles from Finance

Property Finance Roadshow 2017

4th - 12th October

4 days
6 specialists
4 locations
Free to attend

Click here to register now