How To Save Money On Your Mortgage
Photo from unsplash
Originally Posted On: How To Save Money On Your Mortgage | TechBullion
There are lots of options that can help you to save money on your mortgage, reduce your monthly outgoings, and pay less on the mortgage in the long term.
Reducing your monthly spend on your mortgage is a great way to get a bit more money in your pocket. A lower mortgage quote to start with will help, such as from https://mortgagequote.com/, but there are other ways to get cheaper rates.
For most people, their mortgage is the biggest financial commitment that they have, and likely the most expensive. Here are some of the top tips to save on your mortgage.
Think About Moving Off The Standard Variable Lenders Rate
If your fixed mortgage deal is coming to an end, you will usually automatically move onto your lender’s standard rate, also known as their SVR. This means that your payments are likely to go up, as these standard rates are usually much higher than the rate that your fixed payments were based on.
If you have been moved onto the SVR, take some to shop around to see whether you could a better deal or a more competitive rate somewhere else by swapping to a new provider. It’s also worth seeing if you can negotiate a better deal with your current provider. A quote from somewhere else can be a good bargaining tool to do this.
If you enter in a new fixed deal, this doesn’t mean you will lose all the money and hard work that you have already put into paying off your mortgage already, as long as you don’t increase the amount that you borrow on your new mortgage deal.
Untie Your Home Insurance
A lot of people have their home insurance bundled in with their mortgage. If yours is, it could be worth taking another look. These deals seem convenient but they can actually often end up being more expensive than paying for your home insurance separately.
It is common to have buildings insurance as a minimum requirement of being able to get a mortgage, but that doesn’t mean that you get it from your mortgage lender. Find out how much you have been paying for your insurance, and use a few price comparison websites to see how much you might be able to save.
Make sure you read the fine print carefully of your new home insurance to make sure you are getting the level of cover that you need, and that it meets any minimum requirements set by your mortgage lender.
Get A Deal That Charges Daily Interest
When you compare the cost of a mortgage that charges interest daily to one that charges interest annually you will always find that the daily plan costs you less money over the length of your mortgage. This is because every payment that you make towards the balance of your mortgage is applied straight away. When lenders work out annual interest, they use your mortgage balance at the start of the year, which makes it cost you more.
Review Your Term
Paying your mortgage off over a longer period of time can help to lower the amount you pay every month. If you find it hard to keep up with repayments, this can be one way to reduce costs. However, remember that increasing your term will lower your payments in the short term but it will cost you more in interest.
Overpay On Your Mortgage If You Can
If you’re on a debt management plan, you probably won’t be able to overpay your mortgage, but if you are debt-free, you could overpay to get your mortgage done faster.
A lot of people have seen their mortgage payments drop in the last few years as a result of low interest rates. If your payments have dropped, you could use the money you have saved to make extra payments on your mortgage to help you lower the overall amount you have left to pay.
On a repayment mortgage, part of what you pay every month is interest and part is the money that you actually borrowed. Any extra payments that you are able to make will help to reduce the amount of capital (what you borrowed) that you owe.
This means that the next month, the interest that you will have to pay should be lower because the capital you owe has been lowered. This won’t make a huge difference overnight but over time it could save you thousands.
Find Special Deals And Low Start Mortgages
Some mortgage lenders will offer discounted plans or plans that have a lower payment amount at first and gradually increase over a period of time. You might be able to find a better deal if you live in a certain area, for example within a short distance of a particular lender. Make sure you do your research to see if you qualify for any kind of deal, as they could help you save a lot of money.
Review Your Budget
Keep a close eye on what you spend elsewhere. Shop around for better deals on everything from utility bills to your phone. Review any costs such as old gym memberships, or online subscriptions and see what you can get rid of.
Reviewing your spending can help you free up extra cash which you can then use to make overpayments on your mortgage.
Get Good Advice
Whether you’re remortgaging or buying your first home, it’s always a very smart idea to seek out expert, impartial advice from an adviser that you can trust to help you. Any decisions you make should be thought about very carefully, as they will have a big impact on your finances.
Even if don’t have the best credit, there are some mortgage lenders out there who might still consider your application, although you will likely to have to accept a higher rate of interest. A successful application would depend on the equity available in your home and how you’ve managed your debt over the past few years. Advice can help here too.