Hello and welcome to this month’s edition of my monthly mortgage advice column.
This month, I want to highlight why getting your mortgage in order sooner rather than later can be beneficial in the long run.
In the current climate, everything seems to be going up in price, so now is the perfect time to review your mortgage and see if you could save some money.
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If you haven’t reviewed it in a long time you could be paying too much interest and higher monthly payments – or be on a longer term when you can actually afford to repay it sooner.
Many people fall into the trap of going on to what is called a ‘Standard Variable Rate’ (SVR) with their mortgage lender.
This means that your initial deal has expired and you fall onto a higher rate, which can fluctuate if rates change.
This can make it more difficult to budget your money effectively each month.
The Bank of England have increased their rates a number of times recently, so if this is you, you’ll have seen your mortgage payment increase already.
We recommend taking a look at what rate you’re on first and see when it expires, if it’s not already.
You have two choices at this point. Either complete a rate switch with your current lender and go on a new deal with them.
Alternatively, look at remortgaging with another lender. You can usually start this process within three to six months of your initial deal expiring.
You could get a better overall deal, saving hundreds, if not thousands of pounds, rather than just sticking with what you know.
A mortgage broker will be able to advise you on what’s best for your particular situation, such as the term you have left or what rate is best to go on to.
The other thing to consider is remortgaging to consolidate debt that you’ve may have accrued over the years. This must be considered carefully and your mortgage adviser will discuss the pros and cons with you.
If your main priority is to have more disposable income on a monthly basis, it could save you hundreds of pounds a month on your overall payments by putting everything into one manageable payment, with just one interest rate.
The downside is that it may be spread over a longer period of time, meaning more interest could be paid back in the long run, so it’s important to weigh up what’s more important to you.
The new interest rate will depend on your ‘Loan to Value’ (LTV). This is the amount your mortgage is versus the value of your property.
Lenders will generally conduct a new valuation of your property to determine what LTV bracket you fall into.
This will either be an online one or physical survey.
Generally, the lower your Loan to Value percentage, the better the interest rate you’ll get, so it’s worth considering if it’s possible to reduce your mortgage balance with an overpayment, to lower the Loan to Value percentage bracket.
With summer approaching fast, now could be the time to review your mortgage and see if you can put yourself in a better financial position for the rest of the year.
Hope you’ve found that useful and see you all next month.
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George Holan is chief editor at Plainsmen Post and has articles published in many notable publications in the last decade.