£4.5k penalty for failing to switch mortgage

Failing to switch at the end of a fixed-rate mortgage deal costs UK homeowners almost £4,500 a year, but remortgaging could save thousands.

The increased repayments add up to an extraordinary extra £9 billion paid unnecessarily. Homeowners often don't move to another fixed-rate deal but instead go on to their lender's standard variable rate (SVR).

Online mortgage broker Trussle looked into the high financial costs of not switching.

Its research revealed one in four borrowers goes on to the standard variable rate after a fixed-rate deal lapses. A 60 percent loan on a loan of £232,710 costs £4,468 more a year on the SVR than on a fixed rate.

Moving on to a better fixed-rate deal through a remortgage can save homeowners thousands in repayments.

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Ishaan Malhi of Trussle said: "Consumers are essentially being penalised for staying loyal to their providers. They are collectively overpaying billions of pounds across the mortgage, utility, produce and service sectors.

"We want to ensure lenders commit to a greater transparency to help borrowers switch easily and eliminate the mortgage loyalty penalty."