For a lot of us UK homeowners, saving money on our monthly outgoings is a top priority. With rising living costs, stagnant salaries and the uncertainty of a ‘deal or no deal’ Brexit looming, every penny really does count.
So how would you like to save £155 or even more, every month with one simple switch?
It sounds too good to be true doesn’t it? But here we breakdown just how, with one simple change you really can be £120 a month better off!
Step 1) A bit of research
Now hands up who’s forgotten when their current mortgage deal comes to an end or even what interest rate you’re currently paying (guilty as charged!) Why not take 5 minutes this evening to pull out your mortgage agreement and check the terms? It should be obvious on the main document (not hidden away in the wee small print), so a quick glance should tell you a) when your current deal comes to an end (if it hasn’t already) and b) what the current interest rate is.
For example; if you have already come to the end of a fixed rate deal, then your lender will have automatically switched you on to their Standard Variable Rate (SVR), which often means your monthly repayments will probably be higher than what you were paying on the fixed rate. Your lender will have contacted you to advise you of this, near to the end of the deal period, but if like me you tend to put these things to one side for another day, then forget about them altogether! It’s not too late to rectify this, it could save you hundreds of pounds!
Step 2) Doing the maths
Now this is where I would personally call in the experts to do what they do best (and do all the hard work for you), but at a glance, if you are paying £870 on a 3.5% interest rate and you switched to an interest rate of 1.37% APR*, then your mortgage payments would reduce to £715 a month. That means you could save £155 every month – that’s a whopping £1,860 a year.
Step 3) Grabbing a great deal
So if it looks like you’re in a position to save yourself a nice little sum each month, then you’ll need to secure a deal for yourself. You have several options to do this:
- Go to your existing lender and ask if they can switch you on to a lower rate mortgage. Keep in mind your existing lender can only advise you on their own range of products so you could be missing out on some lower rates, available from other lenders!
- Search the market yourself! Using price comparison sites, search around for a low rate mortgage deal. Remember you may not be eligible for some of the mortgage products and some of the lowest advertised rates will only be accepted by borrowers with a high amount of equity in their property and a squeaky clean credit history.
- Speak to an expert and let them do all the hard work for you! An independent mortgage adviser will search the whole market, find you a range of options using their knowledge and expertise and will advise you which mortgages you’re most likely to be accepted for. Plus the adviser will manage the whole application process for you, marvellous!
What to look out for…
When doing your research, keep in mind if you are still tied in to your current mortgage deal, your lender may charge you a fee for exiting early. See our blog to help you calculate if it’s still worth leaving your current deal. If it’s not going to be financially beneficial for you, keep an eye on the market rates until you are in a position to shop around again.
Some lenders and advisers will charge a fee for their products/services, so always calculate this in to the total cost of the mortgage. It may well be that even with a fee on a new mortgage, the monthly saving means it’s still beneficial for you to switch.
Not sure of your credit score?
Have you been late with or missed any payments recently? Any credit agreement you are entered in to with credit cards, mobile phone contracts etc will all help you build a credit score. If you have been late or missed any payments these will show on your credit report and lenders will view this before making a decision on offering you a mortgage or not.
But don’t panic, it’s not the end of the world – late/missed payments and even fixed penalties or CCJs do not stay on your credit report forever. Check out how yours is looking and speak to an adviser who will be able to suggest mortgages that are best suited to you, there are lenders who specialise in poor credit history mortgages – so you should have some options to choose from.
We hope you found this useful, why not set a reminder to check your mortgage agreement this evening and find out today if you can save £120 or even more!
Find out if you can save on your mortgage repayments, speak to an expert today.
THINK CAREFULLY BEFORE SECURING OTHER DEBTS AGAINST YOUR HOME. YOUR HOME MAY BE REPOSSESSED IF YOU DO NOT KEEP UP REPAYMENTS ON YOUR MORTGAGE
Example shown: Paying £870 over a 20 year term, on 3.5% APR switching to 1.37% The Cumberland Mortgage, reducing monthly payments to £715, to save £555 per month.
*Representative example: Representative example: A mortgage of £90,000 payable over 25 years, initially on a discounted variable rate for 24 months at 1.37% (variable) and then on our current variable rate of 4.74% (variable) for the remaining 276 months would require 24 monthly payments of £354.47 and 276 monthly payments of £499.63. The total amount payable would be £147,399.00 made up of the loan amount plus interest (£56,405.00) and arrangement fee (£699). The overall cost for comparison is 4.3% APRC representative.
Rates correct on 09/01/2019.
The above post is intended to be informative but does not constitute advice – financial, legal or otherwise. Any opinions given are the author’s own and do not necessarily reflect the views of SO Media.