51% of homeowners expect to be mortgage free by the time they reach 60, according to new research from Barclays Mortgages.
However, many are being hampered by the fact that they do not understand common mortgage terminology and are put off exploring the market to secure a better deal.
This lack of knowledge surrounding remortgaging can have a negative impact on homeowners’ financial situation as 49% of British homeowners have never investigated what other deals are out there – even though 32% know it could probably save them money.
Barclays found that 28% don’t know what the standard variable rate (SVR) is, and 45% aren’t clued up on what loan to value (LTV) means.
This has resulted in homeowners relying on others for help and guidance on remortgaging with close to half (46%) doing whatever their mortgage broker tells them, rather than fully understanding for themselves.
A spokesperson for Barclays Mortgages, said: “It’s clear from our research that many find remortgaging a tricky subject to understand, even though UK adults have been on the mortgage payment ladder for an average of 13 years and five months. As a result, homeowners are sticking with what they know and potentially missing out on lower monthly payments.”
“With the average amount left to pay on a mortgage at 45%, and the best deals often found at lower LTVs, remortgaging sooner could end up saving them money – not only month to month, but over the whole term of their mortgage.”
Barclays’ own data reveals those who do remortgage most commonly switch to a fixed rate deal. 93% of customers who remortgaged in the first half of 2021 opted to lock in their rate for a fixed term. Two-year and five-year fixed terms are revealed to be the most popular term lengths as 88% of homeowners who remortgaged during this time chose to fixed their payments for either two or five years (44% chose a two-year fixed term and 44% chose a five-year fixed term).
The data revealed two-year fixed term deals were most popular with the under 30s as 57% of this age group opted for a shorter term fixed rate period of two years. While homeowners aged 40-56 were choosing to commit to longer term five-year fixed rate deals with 47% locking in their monthly payment for five years.