2 million homeowners are losing £10 billion a year because switching mortgage isn't clear or simple*.
Trussle is calling on mortgage lenders and brokers to commit to a Mortgage Switch Guarantee.
What is the Mortgage Switch Guarantee?
The Mortgage Switch Guarantee is a set of principles to be agreed and followed by the mortgage industry to ensure transparency at every step of the homeownership journey.
At Trussle, we believe that everyone should love their journey of owning a home and that's why we're committed to improving the areas of the mortgage journey that negatively impact borrowers the most.
What are these principles?
Why are so many borrowers getting an unfair deal?
Almost all mortgage borrowers should switch to a more suitable deal before they end up on a high interest Standard Variable Rate (SVR). Most are doing this, however around one in three borrowers aren't for various reasons.
What have we done so far?
In November 2016 we published research showing that two million customers were overpaying thousands of pounds in extra interest a year due to not switching away from their lender’s high-interest Standard Variable Rate. We conducted further research to understand the reasons why so many haven’t switched, which we published in our May 2017 edition of our yearly report, the Mortgage Saver Review.
These insights led to our initial proposals for a Mortgage Switch Guarantee, outlined in our White Paper. This received nationwide media coverage, encouraging both consumer and industry debate. We then spent a year further analysing industry data and speaking with thousands of borrowers to identify their reasons for not switching to a mortgage deal that is better for them. We also consulted a wide range of industry leaders to clarify an ambitious but necessary set of principles.
Why do borrowers need a Mortgage Switch Guarantee?
Home owners who lapse onto their lender’s Standard Variable Rate (SVR) are being stung with around £4,700 a year in extra interest. For many, this is a life-changing amount of money that could be the difference between affording a family holiday, medical bills, or university fees.
We believe that a Mortgage Switch Guarantee would drastically improve the financial well being of millions of families across the UK.
The already successful Energy Switch Guarantee promises customers who find a new deal that their move will be free and completed within 21 days. Similar pledges in the mortgage sector would help tackle a lack of transparency around when and how to switch to a better deal.
"We knew we were paying more than we should be, but it wasn’t something we thought much about. When I went on maternity leave, I decided to start looking into it, and only then did we realise how much we could save." - Ella's story
"Our house had moved out of negative equity, so we thought we could improve our monthly payments, which were very high. [We switched from a Standard Variable Rate and] are now saving approximately £170 a month. As we haven't had a holiday in two years, we can now save for one." - Garrie's story
Mortgages are the greatest source of debt for households in the UK. It’s time that the mortgage industry, the regulator, and Government worked together to improve the situation for borrowers and put money back into the pockets of consumers and the economy.
The goal for the Mortgage Switch Guarantee is to be adopted by the mortgage industry in a move which would champion borrowers at each step of the home ownership journey.
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