UK borrowers who have suffered a drop in income during the pandemic could soon be paying thousands of pounds more in monthly mortgage repayments, according to the latest research.
The survey by Legal & General Mortgage Club found that one in three borrowers are considering staying on their current lender’s Standard Variable Rate (SVR) once their existing mortgage product expires.
According to the analysis, moving onto a lender’s SVR could increase annual mortgage repayments by more than £2,500 when compared to borrowers who lock into an average two-year fixed rate product.
Homeowners who have seen their finances take a hit during the pandemic should reassess their mortgage options, L&G said.
Research suggests that the impact of Covid-19 is deterring thousands of borrowers with maturing loans from remortgaging.
This could impact over 700,000 borrowers who will reach the end of their two- and five-year residential fixed-rate mortgages in 2021.
More than half of borrowers who have seen their income reduced as a result of the crisis are concerned that lenders will now be scrutinising their finances in more depth compared to pre-Covid levels.
One in two are concerned that their decision to take a payment ‘holiday’ will affect their future mortgage options, and two thirds believe it will be harder to get a mortgage when furloughed.
Those who have seen their incomes negatively impacted by the pandemic are also far more likely to feel ‘not confident’ about remortgaging compared to borrowers whose incomes have remained stable.