Saving Money on your Mortgage

The mortgage is often the largest of the monthly bills you have to meet and with so many people having borrowed very large amounts, these can be substantial amounts of money.

Everyone likes to save money, and just as you can shop around to find the cheapest house or car insurance, then you can shop around for the best deals by Re-Mortgaging. The only difference is that because many of the lowest interest rate deals involve some sort of fees, then you are unlikely to do it every year!

How much could you save? This largely depends on the size of the mortgage involved. If your mortgage is less than around £30,000, there might not be huge amounts of savings to be gained.  With many people having taken on very high levels of mortgage to either get on the property ladder or move up quickly when prices were rising rapidly, the money that can be saved is very substantial indeed.

Just as an example, if you took a straightforward capital repayment mortgage of £100,000 over 20 years where the variable interest rate was say 6%, and it was compared to one where a lender was offering a 1 ½ % discount for a 2 year period, the saving would be over £2,000. Even if there was an arrangement fee to pay, the saving would be equal to a very handy pay rise!

There are various types of deal available, such as the straightforward discount where the lender is “buying your business” or perhaps giving you an up front cash sum (“cashback”) instead. Or perhaps you have just started a family and want to move to a fixed rate so you know your outgoings.

Consolidation. Your mortgage is “secured” on your home (which is why your home is at risk if you don’t keep up the payments), but many people have also run up large loans or debts that are not secured on their homes and so they end up paying higher interest rates and high monthly amounts. A way of reducing these costs is to add the debt on to your mortgage by re-mortgaging as this will normally involve a lower interest rate. You need to remember that the longer you borrow the money over the more you pay in credit charges.

Getting the right deal and making the most of your money is very important and even more so in these times of economic stringency, and our mortgage advisers are well placed to help you because we are Independent Financial Advisers and are able to deal with the whole of the independent market that is available to us.

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