Cutting down your monthly mortgage costs
Thu 27 May 2021
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.
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?
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- but help is at hand.
If you’re looking for a mortgage then the Fee-Free Mortgage Advice Service provided by Tenet Mortgage Solutions Ltd could help. Their expert mortgage advisors have independent access to the mortgage market and will guide you through the process from enquiry to completion.
Important things you should know:
PMGI Limited, trading as Police Mutual acts as an intermediary for the purposes of introducing its customers to Tenet Mortgage Solutions Limited, part of Tenet. You will not receive advice or any recommendation from Police Mutual. Such services will be provided by Tenet Mortgage Solutions Limited who will provide Police Mutual with information about the services you have received. Police Mutual will receive 18.6% of any lender procuration fee from Tenet Mortgage Solutions Limited in connection with the provision of mortgage broking services.
A mortgage is a loan secured against your home. Your home may be repossessed if you do not keep up repayments on your mortgage. You may have to pay an early repayment charge to your existing lender if you remortgage.
PMGI Limited, trading as Police Mutual is authorised and regulated by the Financial Conduct Authority. Financial Services Register No.114942. Registered in England & Wales No. 1073408. Registered office: 80 Fenchurch Street, London, EC3M 4BY.
Type of article: Articles
Category: Owning a house
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