Home Owners Should Check Their Loan Rates
For almost two years now, the Bank of England base rate of interest for loans and savings has remained at the historically low level of just 0.5 per cent, which has had the effect of saving a large number of borrowers hundreds, or even thousands of pounds on the cost of their home owner loan or mortgage.
But now a warning has gone out to complacent individuals with a home owner loan, that the may have been lulled into a false sense of security with regard to the low cost of their loan repayments.
The news comes from research conducted by the price comparison site Unbiased.co.uk, who claim that almost half of all the borrowers with a home owner loan have not reviewed their loan deal to try and find a more competitive rate, since the base rate fell to its current low rate back in March 2009.
Of those borrowers who currently have a loan on their lenders standard variable rate, 52 per cent have not shopped around for a better deal and 20 per cent of these individuals say the reason is due to the rate being so low they do not need to worry about their monthly loan costs.
However, if the base rate were to rise even by a small amount, this could have a large effect on many borrowers’ finances. On an average loan of £150,000, an increase in base rate of just 0.25 per cent could mean an extra £375 per year in loan interest payments.
Karen Barrett of Unbiased said “With the bas rate remaining at 0.5 per cent for this period, it is easy to see why homeowners have become less vigilant in reviewing their mortgages, with our figures showing that almost half have not looked at their deal at all during the last 22 months and, as a result, may be missing out on moving to the best value deals currently available.”
