Mortgage rates: How you could be overpaying THOUSANDS for your mortgage

Customers of the big six lenders on the market could be paying up to £3,240 more on their annual repayment bill, it has emerged.

It has been revealed that customers are suffering this huge bill after they slip onto their standard variable rate (SVR).

They can pay up to £272.50 due to an ‘inertia tax’ for every month they delay the remortgage.

The total sum in the UK is nearly £10bn in overpayment showing the huge cost to homeowners.

Research by mortgage broker Trussle found that the big banks included Barclays, Nationwide, Santander, HSBC, RBS, and Lloyd.

Any mortgage owners who use any of these could see their monthly interest rate increase to an average of 2.5 per cent when it is automatically switched from a two-year fixed rate mortgage to an SVR.

As these banks are 69 per cent of the mortgages given in the UK, it means a lot of customers could be affected.

Two-thirds of mortgage holders in the UK admitted they don’t know that SVR’s have a worse rate, which causes concern for owners attempting to pay off their mortgage.

Ishaan Malhi, chief executive and founder of Trussle spoke out about the implications.

“Borrowers are being put at a huge disadvantage by not understanding the implications of lapsing onto their lender’s Standard Variable Rate. This costs UK homeowners an alarming £10 billion a year in interest payments,” he explained.

Customers need to be able to understand the difference in costs to avoid being caught out, although Ishaan explains how it is also up to the government.

“Potential solutions could be to agree a reasonable upper limit on SVRs, and a system where lenders are obliged to warn their mortgage customers well in advance of their fixed rate coming to an end,” he said.