It was Mortgage Freedom Day on 16thApril, the day when the average UK mortgage holder will have earned enough to pay off the annual cost of their mortgage.
This conclusion has been calculated by Halifax, taking into account the average take-home pay and mortgage repayments for a new borrower. It also bases it on a 30% deposit, which may seem a high figure to save up, but according to figures from UK Finance, the average first-time buyer is aged 30 with a gross household income of £41,000. Assuming that they have been saving to purchase a house for at least a couple of years, these averages might certainly put buyers in a suitable position for a 30% deposit.
At the very least, this day serves to get people thinking about their own mortgage situation, and encourages them rethink their own finances, perhaps in preparation for the next remortgage.
Ishaan Malhi, CEO and founder of online mortgage broker Trussle, has commented on UK Mortgage Freedom Day: “Mortgage Freedom Day is a great reminder of just how crucial it is to think about your mortgage. Some homeowners will probably be alarmed to find out how much of their working life is spent earning enough to pay for their home.
“What the day also shows is the importance of being on the right mortgage, so that you can keep your payments as low as possible and spend your salary on other worthwhile things in life.
“Today there are two million UK homeowners sitting on a costly Standard Variable Rate deals because they haven’t switched at the end of a fixed term. Each could save more than £4,500 a year in interest payments – two months’ worth of salary for the average person in the UK – by switching to the most competitive deal on the market.
“A number of things contribute to this switching inertia, from a lack of education and understanding of mortgages, to poor communication from lenders and brokers. It’s up to the industry to address these issues. When we do, perhaps we can celebrate SVR Freedom Day.”