Research reveals millions of UK home owners are paying too much for their mortgage
Some 1.4 million UK households are struggling to pay their mortgage and 2.6 million people think their monthly mortgage payments are too high, new research has found.
The study also shows that 2.5 million people have had to make cutbacks elsewhere in order to pay their mortgage but overall more than half, 58%, have never remortgaged to try to bring down their outgoings.
The research from lending advisors L&C Mortgages also found that 4.2 million people said they cannot imagine a time when they will not be paying their mortgage which the firm suggests is evidence that many feel overwhelmed by their monthly payments and cannot see a light at the end of the tunnel.
The data shows that on top of worrying about the cost of their mortgage, there is an average debt of £10,048 across overdrafts, student loans and on credit cards. This number rises to an average of £12,992 when looking at those aged between 18 and 34, which the report suggests could present a real problem for those trying to get a first foot on the property ladder.
L&C believes that it is worrying that 36% of home owners surveyed are still on Standard Variable Rate mortgages (SVR) which have rates typically higher than other deals and it warns that if interest rates rise the four million on SVR rates could see their payments go up even more.
Overall, the research also highlights that 1.1 million households are wasting £2.78 billion by sitting on the wrong mortgage deal.
‘The fact that people have been making cuts in order to cover mortgage payments indicates how people feel they are just about managing in many aspects of their lives,’ said David Hollingworth from L&C Mortgages.
‘We know that British households last year ran down their savings to a record low and that the cost of basics such as energy and the weekly shop are continuing to rise so it’s no wonder that people are feeling the pressure when it comes to their monthly mortgage payments,’ he pointed out.
‘The problem is that although people feel they are struggling, they are not taking steps to manage their mortgage. Our research has found that millions are sitting on the wrong deal, even though seeking advice could potentially save consumers some hard earned cash by getting a better deal and even enable them to pay off their mortgage more quickly,’ he added.
L&C also looked at the average time it would take people to pay off the existing balance on their mortgage across the UK. The research found that despite home owners feeling as though they’ll be paying their mortgage off forever, the end could actually be in sight but for many.
The average household expects to pay off their current mortgage in 13 years but when looking at the data across the different regions, the outlook is positive, with half of the UK potentially paying off their mortgage in just over a decade.
Home owners in London face the longest amount of time left to repay, with the research finding that on average people in the capital are looking at a 16 year remaining term until their mortgage is paid off.
‘It is really important that people keep on top of their mortgage and take control of their monthly payments by using the current low in mortgage rates to their advantage. It is always worth seeking advice to make sure you are on the best deal and see if there is anything that can be done to relieve the stress of managing high payments,’ Hollingworth concluded.