One in five can’t remortgage due to Covid impact
Nearly one in five UK homeowners (19%) have been unable to remortgage their home since the pandemic started, according to comparethemarket.com.
And they could now face higher monthly mortgage repayments as a result.
The comparison site found that the impact of the pandemic on employment and financial stability has meant that many households have become ineligible for competitive fixed rate deals.
Why can’t they remortgage?
More than two-fifths (41%) of those who couldn’t switch their mortgage said their application was rejected because they had lost their jobs, while one-third (32%) said it was because they had been furloughed.
A quarter (26%) of homeowners thought their application was rejected because of a salary cut.
What is the impact?
If you are unable to remortgage at the end of a fixed mortgage term you could automatically revert to your lender’s higher standard variable rate (SVR).
Households could see their monthly mortgage payments rise by hundreds of pounds each month on an SVR, which in turn has significant repercussions on the ability to pay household bills and meet other financial commitments.
However, even if you can’t remortgage to a new lender, ask your existing lender if you can transfer to a new fixed rate product with them, which is likely to be cheaper than their SVR.
Mark Gordon, director of mortgages at comparethemarket.com, said: “Being unable to remortgage means some households will roll onto a lender’s SVR rate, and, over the years, could lose out on thousands of pounds in higher interest charges. If you can’t remortgage with your current lender, it is worth doing some research and seeing if you would be eligible for a fixed rate deal with another lender or speaking with a mortgage broker.”