Get the best rate on your remortgage

Over half of homeowners could be missing out on an average of £1,200 of savings every year by not switching onto a better deal...

If it ain’t broke don’t fix it, right? Wrong: well, it is when it comes to mortgages anyway.

Thanks to the perceived hassle of switching mortgages, the temptation is to stay put until you really, absolutely, definitely have to bail. Indeed, after extensive personal research (a conversation with my mother and father), it seems likely that most people bury their head in the sand when it comes to keeping up to date with potential home loan savings.

But this ostrich-attitude could be costing homeowners big, if a new report from Barclays is to be believed.

Bumper savings

The Barclays survey shows that property-owners could be missing out on an average of £1,200 every month because they never remortgage. Outside of moving home, 58% of borrowers say they have never remortgaged, thinking it too much hassle and the savings too small.

The same survey also found that 44% of respondents have spent more time on every day money-saving efforts focused on slashing food and clothing bills. Strange when you consider that the biggest household expense – the mortgage – is being largely ignored.

So how can you tell that it’s time to ditch and switch?

Equity

The amount of equity you have in your home will be a huge factor in determining whether you should remortgage or not.

House prices are anything but stable at the moment. And if you bought your first home at the peak of boom years, you could well be sitting in low or even negative equity. Figures from Lloyds TSB show that one in ten homeowners living in their first property currently owe more on a mortgage than their home is worth.

If this is you, then remortgaging probably isn’t an option – for now anyway.

But if you have lived in your property for a longer period of time and managed to build up a good stack of equity, it could be time to move on. This is especially true if you’re sat on one type of mortgage rate.

SVRs

Millions of homeowners are currently on their lender’s standard variable rate, or SVR. This is the interest rate that most mortgages revert to once the initial offer has elapsed (the end of a five-year fixed rate period, for example).

The average SVR rate is currently 4.78% according to Moneyfacts.co.uk, though there is still a lot of variation, with some lenders' rates stretching up above 6%. Conversely, owing to the low base rate, some are actually still fairly low. However, even if you’re enjoying a cheap SVR, you shouldn’t necessarily stick with it.

I have the same problem with SVRs as I do with discount mortgages. Namely: they can go very wrong, very quickly.

As I reported in These cheap mortgage won’t be around for long, vibrations from the Eurozone crisis have started to push up mortgage rates in Britain. And when the full avalanche of rate rises arrive, it’s likely to be the SVRs – as they are completely at the mercy of the lender – that are pushed up first. Indeed, Lloyds has recently upped the standard rate for Bank of Scotland customers to 4.95%.

So if you’re on an SVR, it’s at least worth taking a look at what other deals are currently on offer.

Rates are still low – but act fast!

It was only a few months ago that we were jumping for joy at the cheapest mortgage rates in 23 years. And while rates have climbed since July, they’re still pretty good.

Just this week, Leeds Building Society slashed rates on its ten-year fixed rate mortgage to 4.99%. The deal is available up to a maximum of 80% LTV and comes with a £199 booking fee and £800 completion fee. That’s a full decade of security for only two tenths of a percentage point more than the average SVR rate. Madness!

Five-year fixed mortgages are also scandalously cheap. If you can stomach 75% LTV, Chelsea’s 3.29% mortgage is the best rate you’ll be able to get your hands on. Who needs SVRs at that price?

Now, I’m a big fan of long-term fixed mortgages, especially at this price. They offer far more rate security – valuable in this financial climate – and make it easy to budget it monthly repayments.

However that’s not to say that you can’t make huge savings by opting for a tracker mortgage. In this category, my personal favourite deal would be the lifetime tracker. Your interest rate will rise and fall with the base rate, but you’ll never be pushed onto an SVR.

The same cannot be said for two or three year term trackers, which – while cheaper at first – may leave you when you need them the most. Read Four reasons not to get this mortgage to find out more.

Take a look at the table below for the best lifetime trackers currently available – most of which are from HSBC.

Downsides

Obviously the downsides of remortgaging are that you’ll have to shop around for the best deal again and shell out for fees. However this is no reason to dismiss it, especially when the rewards on offer for your effort could stretch into five figures if you find the right deal.

Below I’ve put together 15 of the best products currently available to those wanting to remortgage.

To get more information about any of these products and find out anything else you may need to know about switching your home loan head over to our mortgage centre where you can speak to our fee-free, accredited brokers.

It’s also worth taking a look at our remortgage calculator, which will tot up exactly how much you could save by ditching and switching.

15 fantastic mortgages

More: Tenants: Know your rights | Government to help borrowers buy with 5% deposit