While taking out a mortgage is obviously ideal for purchasing property or any other big money buy, it could very plausibly put you into more debt than you have ever had. Naturally, then, it’s in your interest to relieve the financial burden of a mortgage whenever and wherever you can.
In this article, we look at five ways in which you can trim your mortgage’s costs. It wouldn’t be an exaggeration for us to say that thousands of pounds could be saved in the process.
Seek a comparison company’s help with finding the right mortgage
There is such a broad choice of mortgage deals out there that you could, at first, feel indecisive about which of them to choose. This choice is also so wide that, even when you do choose a deal, you could then wonder whether you really made the right decision. Thankfully, Mortgage Solutions can consider a lot of different criteria whether you want a buy to let mortgage or something different. That company can look over the market in search of the most appealing deal for you.
Opt for a cheap fixed rate deal while you still can
Martin Lewis has warned, in an Express article, that mortgage rates could rise quickly in 2017. The money-saving expert adds that he is not referring to Bank of England-set base rates, but instead cheap fixed rates based on interest rates. He notes that some cheap deals have already got the chop – and that, if interest rates soon rise as the City has predicted, it’s worth choosing a fixed deal now.
Overpay without charge as far as possible
With most mortgages, it’s possible to annually “overpay” by a particular amount – generally, roughly 10% of the mortgage balance – without incurring an Early Repayment Charge. That’s the charge which you would probably have to pay if you stumped up more than 10% overpayment. Mirror recommends overpaying if you can afford it, as you could pay off your mortgage much sooner and, as a result, significantly cut how much you pay in interest.
Dip into your savings for an offset mortgage
If you have a lot of savings, you could use them for early clearance of your mortgage without any additional financial outlay on your part. This is because many lenders offer an offset mortgage. With this kind of mortgage, the account will be linked to another containing your savings; these will be “offset” against the mortgage debt and so lower how much interest you need to pay.
Try to scrimp and save if you initially rule out overpaying
You might be convinced that, if you are currently staying only just within your means, overpaying isn’t an option available to you. However, in this situation, we would urge you to look again – and closely – at all of your various outgoings. You might be able to save money by, to cite a couple of examples, switching energy supplier or forgoing a daily drink at your local coffee shop. Use a fine comb…