How homeowners can beat the cost of living crisis
Homeowners up and down the UK are dreading the inevitable energy price hike expected this April, alongside a wider cost of living crisis. But did you know mortgage payments are at least seven times that of typical annual energy bills? Switching mortgages could save more than £2,000 a year, more than the typical annual energy bill.
Post updated: February 3rd, 2022
2 minute read
L&C Mortgages, the UK’s leading fee free mortgage adviser, has shown that homeowners concerned about rising costs should focus on their mortgage to combat the cost of living squeeze. Its data shows that mortgage payments will typically amount to at least seven times that of the typical spend on energy bills.
Analysing data over 2021 showed a typical monthly mortgage payment of just over £800 per month, compared with spending on gas and electricity of £112 per month. Energy is expected to rise by over 50% as increases take effect but mortgage savings could wipe out those increases.
That’s because mortgage rates are currently very low. Remortgaging from an average SVR (3.91%) to a leading fixed rate (1.36%) could save customers over £2,200 per annum on a typical mortgage. Cutting your mortgage rate by just 0.65% could offset the anticipated £600 annual increase in energy bills.
But mortgage rates are already on the rise as lenders have started to pass the base rate increase through. With more rate rises on the cards in the face of high inflation borrowers can not only make savings now but also fix their rate to avoid further increases in future.
Mitigate cost of living crisis by remortgaging
David Hollingworth from L&C Mortgages said, “It’s easy to focus on the costs that are climbing rapidly like energy bills and many homeowners will feel the pinch due to the energy price cap rise in April, when council tax and National Insurance changes will also begin to bite.
Many of these elements are out of our control but the mortgage is often a substantially higher outgoing and could offer a silver lining for homeowners. Fixed rate mortgages offer a chance to save thousands for those that have drifted onto a lender’s Standard Variable Rate. Cutting the biggest household bill could offer savings that mitigate the inevitable increase in other costs but also gives the chance to shelter payments from any further interest rate rises.”
How to remortgage
How to remortgage your Help to Buy
How to protect against a mortgage rate rise?
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