I’ve presented around 8 seminars already this year and am astonished that despite the fact many of these were to homeowners and investors, the majority, when asked haven’t reviewed their mortgage in the last six months.
This is nuts. Most of the news headlines are now telling people rates are at their ‘lowest’ for a long time – and some lenders are advertising their rates as the ‘lowest ever’.
So if you haven’t already, please make sure you use a good broker who will search ‘whole of market’ ie all lenders available to find you the best rate. Of course you have to consider the costs of switching and for some it won’t be possible as your home may be worth less than you bought it for, but for many, it’s a worthwhile exercise.
Switching your mortgage to a rate that suits you and your family’s circumstances better can save you tens of thousands of pounds.
How often should you review your mortgage?
According to the government’s Money Advice Service you should review your mortgage:-
When interest rates change
When your mortgage deal comes to an end
Once a year if you are not tied into a deal
And their on-line examples shows if you switched from a 5% deal to a 3% one, you could save £1,728 a year on a home with a mortgage of £175,000.
Wondering if you can save money from switching? Visit the Mortgage Advice Bureau to check if you can get a better rate.
Can you afford to pay off your mortgage early?
But you can save even more if you are able to use this money to pay off your mortgage quicker too. Some lenders allow you to ‘overpay’ your mortgage, which means you can cut down the number of years you pay off your loan and save on interest payments.
Better still, for many, the need to work is driven by the need to pay off a mortgage – typically around 30% of your outgoings. So if you can pay your mortgage off earlier, for some this means you can also:-
Go part time
Do a job you love at a lower salary rather than one don’t enjoy
In a recent article for This is Money, Brian Murphy, head of mortgage lending at MAB, said: 'Many borrowers on their lender’s SVR can effectively give themselves a pay rise that beats wage growth simply by remortgaging. According to Brian, by overpaying and maintaining repayments of £666, the typical SVR borrower could cut an additional £6,057 from their debt over five years.
So if you want to give yourself a pay rise you may not be getting from your own company, searching out a new deal may well mean you could save money each month, or make sure you pay your mortgage off quicker. And all that just for a bit of paperwork!
Here are a couple of our checklists which you may also find useful:
Also don't be afraid to check out the Mortgage Advice Bureau.