Anneliese Dodds grilled over Labour's National Insurance plans
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Earlier this week, the Government announced plans to hike National Insurance payments for employees and employers by 1.25 percent as part of its plans to address the country’s social care crisis. National Insurance is paid by the majority of workers in the UK through an automatic salary reduction. Through the tax, Britons become eligible for certain benefits and the new state pension. As part of the new “Health and Social Care Levy”, almost £36billion will be raised by taxpayers to prop up the country’s struggling social care sector.
On Tuesday (September 7), Prime Minister Boris Johnson said 14 percent of the highest earners in the population will pay around half of the revenue raised through the tax raise.
Some 40 percent of small businesses and those earning less than £9,568 a year will not have to pay anything extra, as the current plan stands now.
Habito estimates that someone earning the average UK salary of £31,461 would end up paying an extra £274 a year in taxes.
However, the mortgage broker has found Britons can “offset” this pricey tax hike by remortgaging their property.
The average homeowner in the UK can save approximately £294 a month just by remortgaging from one of the country’s six leading lenders’ reversion rates or standard variable rate (SVR).
Research carried out by Habito suggests that this is equal to a saving of £3,528 across a full tax year.
A study of over 2,000 homeowners carried out by the mortgage broker found that this could be a lucrative possibility for many Britons.
Some 27 percent of those surveyed said they were on their lender’s highest possible rate of interest.
Comparatively, almost one in five of those polled by Habito admitted that they did not know if they were or not on the highest rate of interest.
Rosie Fish, mortgage expert at Habito, believes remortgaging a property would be beneficial to many across the country who are looking for extra savings in response to the Government’s tax hike.
Ms Fish said: “Unexpected tax increases can be stressful, especially in uncertain times.
“But there are ways you can cut your costs in other parts of your life – your mortgage being one of them.
“Remortgaging is often made unnecessarily confusing and should be viewed more like switching utility or broadband provider, but with a bigger potential return.
“If you’re not sure what mortgage rate you’re on or would like to know your options, speak to a free mortgage adviser.
“A mortgage switch could balance out those unexpected new tax bills, with extra savings to spare.”
How to remortgage
Remortgaging is when homeowners apply for a new mortgage with a different lender, but stay in their current home.
Usually people decide to remortgage if their current mortgage deal is about to end, or has already moved to a follow-on rate.
It usually takes four to eight weeks after someone applies to remortgage for a response. For most applications, Britons will need to speak to one of the lender’s mortgage advisers, who will be qualified to advise them about the best deal for your needs.
Lenders commonly let homeowners sign an online Agreement in Principle (AiP), which allows them to find out if a lender is willing to lend the amount which is needed, without a full credit check.
Before applying for a remortgage, homeowners must be aware of the costs they could potentially pay, which include an application fee, a valuation fee and a solicitor’s fee.
After singing an AiP, homeowners will be able to apply for their remortgage. However, they will need to provide information about their personal and financial circumstances, which includes details of their current mortgage.
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