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How to save £1,000s on your mortgage in three easy steps

save thousands on your mortgage

We’re all keen to get approved for a mortgage and be homeowners, but how many of us really want to be a slave to debt for the rest of our lives. These days mortgages are typically taken out over 25 or 30 year terms, but with the average age of a first-time buyer now 30 (33 if you live in London) this could leave you saddled with mortgage debt well into your 50s or even 60s.

If you dream of being mortgage-free then there are ways that you can pay off your mortgage early – potentially saving thousands of pounds worth of interest payments. Want to know more? Then read on to find out how you can reduce your mortgage in three easy steps…

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Step 1: Review your current deal

Think you’re on a good deal? You may be able to do better. If you’re coming to the end of your current deal, or you’ve been switched onto your lender’s standard variable rate then you may want to think about remortgaging to get a better rate of interest.

It pays to review your mortgage regularly to make sure you’re on the best deal around – even if you have to pay an early redemption fee to exit your mortgage before the end of your agreement, sometimes the savings you make could be significant enough to be worth making the switch.

Step 2: Seek expert advice

If you’ve had a look around to see what might be available, then take the next step and speak to a mortgage adviser. A mortgage adviser can do all the legwork for you, they know the market and what products are out there and can find you a good deal to suit your particular circumstances. They also know what to look out for when it comes to getting accepted so it can be a wise move seeking their expertise. Even if the time isn’t quite right to move mortgages, they can give you the reassurance you need that you’re actually already on the best deal and advise you on the next steps to take.

Step 3 – Work out your options

If you’re able to switch to a lower rate mortgage, great news! You now have a couple of options:

a) You can choose to keep your mortgage term the same – you’ll still be in debt for the same amount of time however your repayments will be reduced meaning more money in your pocket each month to spend on other things or to save or invest.

b) Overpay your mortgage – if you can still afford to make higher repayments each month, with a lower rate of interest, this could make significant inroads into your mortgage capital overtime, reducing the overall term of your mortgage.

For example, let’s say you have £150,000 outstanding on your mortgage, with 25 years left. Your current interest is 3.5% APR. This gives you a monthly repayment of approx. £751. If you were to overpay by £100 each month (assuming your lender allowed this), this would save you over £14,396 in interest payments alone and it would mean your debt would be paid off 4 years and 4 months earlier than originally planned.

The higher the percentage that you can pay off, the more your mortgage term is likely to reduce, however always make sure you check with your lender before doing so. Some lenders may set a limit on overpayments, and if you go over this, you may be subject to penalty charges, which are likely to negate any savings you make.

Speak to an adviser

Our trained expert advisers have access to the UK’s leading lenders and using their knowledge and skills will place you with the most suitable leader and product for your needs.

01244 950 307

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 or the Mitchell Farrar Group.

THINK CAREFULLY BEFORE SECURING OTHER DEBTS AGAINST YOUR HOME. YOUR HOME MAY BE REPOSSESSED IF YOU DO NOT KEEP UP REPAYMENTS ON YOUR MORTGAGE.

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