Poor mortgage choice costs £18,000

Not shopping around for a mortgage can cost homeowners £18,000, a new report finds.

With some 1.4 million homeowners due to come to the end of a fixed-rate deal by the end of the year, according to the Council of Mortgage Lenders (CML), a large number of borrowers could be facing dramatically higher costs.

It is feared such borrowers will automatically transferred to a standard variable rates (SVR) of around seven per cent.

However, according to research from Spicerhaart Financial Services (SFS), based on an average £150,000 mortgage for a property valued at £200,000 and 20 years remaining on the mortgage, homeowners could save £18,000 over the term of their mortgage, by using an independent financial adviser to help find the most competitive remortgage deal available.

"With lending criteria tightening, products rapidly coming on and off the market, and lenders rates changing, it is essential that consumers get the best guidance possible," said Steve Cox, SFS operations director.

"Brokers provide independent, comprehensive and invaluable advice for those looking to remortgage.

"In this current climate it is more important than ever. The figures speak for themselves, finding the most appropriate remortgage deal can save borrowers thousands of pounds."

In recent weeks, consumers have been encouraged to cut out brokers and go directly to lenders when selecting a mortgage – as lenders have begun to offer the best deals unilaterally.

However, the importance and advantages of using a broker to save homeowners time and money should not be overlooked, argues Spicerhaart.

Independently consulting lenders and searching for deals can be extremely time consuming.

Intermediaries who are unbiased towards a particular lender or product will give a full and accurate view for the customer, saving them time and effort.

Chris O'Toole