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Money saving

Get a better mortgage deal and save money Part 1

Posted 14 August 2015 by Christine Walsh

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Learn how to save on your mortgage with our hints and tips for getting a better deal.

For many people, there’s nothing better than having the security of owning your own home. But, you’d have to question what the point is if you are paying so much for your mortgage that you can’t afford to do anything else. If things get really bad, it might seem like all you do is go to work so that you can keep the roof over your head. This is not a good situation to be in, especially if you work such long hours so don’t spend much time there anyway. 

So, if you could find a way to reduce your mortgage payments wouldn’t you want to know how to do it?  Well, you may be able to by remortgaging. In this two part series, first we’ll look at why you should consider remortgaging, and then we’ll give you some hints and tips on how to get the best deals. 

Why remortgage?

First, let’s look at the mortgage you already have. Do you know what deal you’re on? If you’re on a fixed-rate or a discount, do you know when that ends? If you do, what do you plan on doing once your current deal ends?

If you don’t know the answers to these questions, you should really find out, because you could potentially save yourself hundreds of pounds a year by finding and moving onto another mortgage deal. Why is this important? It’s important because, if your initial mortgage deal has ended (whether it was a tracker, discount or fixed rate), and you’ve not done anything to get a new deal, you will probably have been switched onto the your mortgage lender’s Standard Variable Rate (SVR) without realising it.  Generally lenders can set their own SVR and they are usually a few percentage points higher than the Bank of England’s base interest rate.  In some cases they move in line with the base rate too.

The problem with this is that the SVR is rarely the lenders’ best deal, so you will almost certainly be paying more than you were on your original deal. SVRs are also variable so when the Bank of England base rate increases, as it is expected to do soon, then your mortgage repayments may go up too. If your household budget is already tight, you may find any increase in your mortgage payments too much of a stretch. Even a slight rise could end up being the straw that breaks the camel’s back and that’s the last thing you want, because if you start to miss, pay late or part pay on your mortgage payments you will probably incur extra charges and will certainly damage your credit history.  And of course, if the problem persists then you could end up losing your home.

The solution? To see if you can remortgage to get a better deal. This could save you a significant amount of money each month, freeing up cash to make your day-to-day living easier.

That’ll do for this time. On Monday we’ll carry this on with part 2, where we’ll look at how to get the best deals.  

by Christine Walsh

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