James Jones, head of consumer affairs at Experian, said: “With Christmas fast approaching, it’s that time of year when lots of us look for ways to make our money go further – but many overlook opportunities to cut the cost of existing borrowing."
Borrowers could save over £5,000 on their mortgage payments by switching to a new fixed rate 2-year offer, according to Experian and L&C Mortgages.
For example, a homeowner with a £150,000 20-year mortgage on a lender’s standard variable rate (SVR) of 4.49% will have a monthly repayment of £948.16.
The same mortgage on a 2-year fixed rate remortgage deal of 1.11% will have a monthly repayment of £697.23, a saving of £6,022.32 or £250.93 per month.
Taking the arrangement fee of £999 into account, this would still leave a homeowner better off by £5,023.32 over the 2-year period.
Experian also found that almost 6% of homeowners could be coming to the end of their fixed term deal in or over the next three months, so will need to remortgage.
James Jones, head of consumer affairs at Experian, said: “With Christmas fast approaching, it’s that time of year when lots of us look for ways to make our money go further, but many overlook opportunities to cut the cost of existing borrowing.
“Homeowners may be able to secure substantial savings by switching to a new fixed-rate mortgage deal, so we urge anyone with a fix ending soon to look into their options.
"Taking no action will mean you lapse onto your lender’s standard rate, which will usually lead to a hike in your monthly payments.
"With an interest rate rise looming, it would be worthwhile to explore your options now and get a new rate locked in.
“You can get help exploring your options by seeking advice from a fee-free mortgage broker.
"It’s also worth taking a moment to review your credit score and, where possible, make improvements ahead of any formal credit check.”
David Hollingworth, associate director, communications at L&C Mortgages, added: “As we approach the end of the year, we often see expenses and outgoings increase.
"And with living costs on the rise, it’s more important than ever for consumers to shop around and find a better deal.
"They could be saving hundreds of pounds a month by switching to a fixed rate mortgage and also protect against an increase in rates.
"There remain competitive deals on the market, but if expectation of an interest rate rise persists then the deals currently available might not be around for too much longer.
“Use a mortgage comparison to check whether you are on the cheapest deal, or if money can be saved by using another company’s offer.
"When thinking about the switch remember to factor in any other costs and check if there is an early exit fee associated with your current deal.
"However, shopping around could help to save thousands of pounds over a short period of time.”