- FIX THE RATE FOR A LONGER PERIOD
If you haven’t fixed your mortgage rate, MOVE IT NOW…. Banks and building societies start pulling their best deals as rate hikes loom.
Some three million people are paying their lender’s standard variable rate (SVR) — the rate to which a mortgage reverts at the end of a fixed deal — which currently averages 4.76 per cent.
Fixing your loan gives you the peace of mind that for two, five or even ten years, your repayments won’t change.
- RESERVE A RATE
It may be that you’re waiting to lock in to a fixed rate because your current deal hasn’t expired.
Most fixed mortgages have early repayment charges that are triggered if you remortgage before the end of the term.
These can be as high as 7 per cent of the loan value.
But most people don’t realise that you can lock in to a top rate months in advance. Mortgage offers are typically valid for three to six months — so get rate now before deals get more expensive.
- REDUCE YOUR LOAN
When interest rates and returns on savings are low, it makes sense to put money into paying your biggest debt — your mortgage.
Say you have a £150,000 25-year mortgage at 3 per cent. Overpaying by £50 a month would mean your loan is paid off two years and three months early, saving you £6,548 in interest, according to broker London & Country.
Most mortgages typically allow you to overpay 10 per cent of the balance each year without penalty.
- OFFSET THE DEBT
Some lenders allow you to merge your savings with your mortgage account via a so-called offset mortgage. You only pay interest on the sum of your loan minus your savings balance.
- BOOST YOUR DEPOSIT
The cheapest mortgages are reserved for those with the largest amount of equity in their homes. This is because the bank sees you as a lower risk.
If you can stump up a 20 per cent deposit, you’ll get a better rate than those with a 10 per cent deposit.