Five ways to pay less for your Mortgage
A mortgage is potentially the biggest financial commitment you will ever have and it goes without saying that you will want to try and repay it as soon as possible. With the Bank of England rate at a record low, there has been no better time to find a great mortgage deal and to help you pay even less for your mortgage we have listed five top tips below.
The shorter the mortgage term the less interest you will end up paying. Mortgage lenders generally use the standard 25 year term for illustrative purposes however this is not set in stone and if you are able to afford the monthly repayments at a higher level over a shorter term you will undoubtedly save money on your mortgage.
If you are about to come to the end of your mortgage deal or you already have and are paying the lenders Standard Variable Rate, it would be a good idea to check what mortgage deals are available as the interest rates should be more competitive. Typically, the lower the loan to value, the lower the mortgage interest rate will be. A mortgage adviser will be able to check those mortgage deals available to you.
Whether its small monthly overpayments by increasing your direct debit or making a one off lump sum payment, overpaying on your mortgage in any capacity will save on interest. One thing to be careful of is any early repayment charges that may apply to the mortgage product. As a general rule, most mortgage lenders will allow you to overpay by up to 10% per year of the amount borrowed however this does vary so make sure this is checked in advance or talk to your mortgage adviser.
When switching mortgage deals it is prudent to take into account the associated mortgage fees. The lowest rates may carry the highest fees therefore it is always worth taking this into consideration. It may also be sensible to switch to a longer mortgage deal which will lessen the number of times you have to remortgage therefore reducing the number of fees paid.
If you have savings that you would prefer to keep in an account rather than use towards paying off the mortgage, you can ‘offset’ these savings against the amount borrowed and therefore pay no interest on this amount. This will effectively reduce the amount of interest you have to pay. The savings are held by the lender in an ‘Offset’ account which is linked to the mortgage. No interest is paid on the savings held in this type of account as the saving is made through the deduction of interest charged on that proportion of the mortgage.