Cutting down your monthly mortgage costs
Fri 01 Feb 2019
One of the biggest bills we face each month is a mortgage. Here are some ways you could reduce your monthly mortgage costs.
Consider coming off a standard variable 'lenders rate'
If you’re on a mortgage deal, most lenders will revert you to their standard variable rate (SVR) once your rate comes to an end. This will usually see your mortgage payments increase as the SVR tends to be higher than the product rate your payments were based on.
Now is a great time to shop around for a more competitive deal either with your current provider or by switching to a new one.
Switching to a cheaper mortgage deal
Even if you’re mortgage deal hasn’t come to an end you could still switch to a cheaper mortgage deal with another mortgage lender.
Whilst this could reduce your mortgage payments, it is likely that you will have to pay charges for ending your current deal early. It’s worth looking at your current deal to see what these would be and working out if switching deals is a cost effective option.
Get a deal that charges daily interest
You could be paying more on your mortgage if you are charged interest annually rather than daily. Every payment you make reduces your balance and the lower your balance the less interest you have to pay. If your interest is calculated annually it doesn’t factor in all payments you have made during the year. So interest calculated at the start of the year will be higher than later on in the year.
Annual interest mortgages are not very common today but if you are on one you should consider switching- however this option won’t be for everyone and you may incur charges.
Review your term
Repaying your mortgage over a longer period of time can reduce your monthly payments in the short term, making them more affordable if meeting your monthly payments is a struggle. You could talk to your lender to discuss your options in the first instance, as extending the term may not be suitable for everyone.
By increasing your term you will pay more in interest over the duration of the mortgage. If this is something you’re considering you must make sure you get mortgage advice to make sure that all of the options available to you have been fully explored.
Untie your home insurance
Usually lenders will require you to have insurance for your property as a condition of the mortgage offer. This is so you’re able to afford to rebuild should your home be destroyed. So it’s buildings insurance you’ll need in place to obtain a mortgage.
Some mortgage providers bundle home insurance with the mortgage. These deals could end up with you paying a higher home insurance premium than if you paid your insurance separately. Your lender may charge a fee for cancelling or moving but it’s worth checking.
Find out how much you’re paying and take a look at our home insurance to see if we could save you money? There’s currently a 10% discount online – terms and conditions apply. Home Insurance is provided by Royal & Sun Alliance Insurance plc.
Get good advice!
Any decisions you make need to be carefully considered as they could have a big impact on your finances. So whether you’re looking at re-mortgaging to get a better deal, or buying your first home, we know that finding a mortgage can be time-consuming and confusing- that’s where we can help.
Our expert impartial mortgage advisors can review the whole of market and have access to deals that aren’t available on the high street to get the right mortgage deal for you.
Mortgage Excellence Plc, trading as Police Mutual, is authorised and regulated by the Financial Conduct Authority. Registered in England & Wales No. 03527577. PMGI Limited, trading as Police Mutual, is authorised and regulated by the Financial Conduct Authority. Registered in England and Wales No. 1073408. Registered office for both companies is: Alexandra House, Queen Street, Lichfield, Staffordshire WS13 6
Type of article: Articles
Category: Owning a house
Return to News and Blog