Five Ways to reduce your mortgage payments

Rising energy and food prices are becoming a growing concern for countless households right now, particularly as the tax burden looks set to increase too.

So as the cost of living in the UK continues to head upwards, many of us will be looking at where we can make savings and free up some extra money.

Mortgage payments are a good place to start, as many of us could be on a much better rate or a cheaper deal.

Of course, the mortgage market is complex, with countless different options open to you. So, it’s well worth speaking with a mortgage broker with expertise in this area, who can guide you through this maze and point you in the right direction.

Look for cheaper deals

Even if you’ve managed to avoid being moved onto an SVR, there’s still more you can do to cut your mortgage payments, such as shopping around for cheaper deals.

If you research the market and compare rates, you could find big savings are there to be made, particularly if the value of your house has gone up since you took out your original mortgage. Always speak to your mortgage broker as they will have access to more deals than are available by going direct to lenders and often at preferential rates.

Don’t stay on a standard variable rate when your deal expires

You’ll automatically be moved onto a Standard Variable Rate (SVR) when your mortgage deal comes to an end. This is usually higher than the rate you can get with a new deal, so if you switch to a new fixed rate offer, you could potentially save thousands of pounds on your mortgage payments.

Pay off your mortgage over a longer period

You could reduce your monthly mortgage payments if you increase the term you’ll pay over. But bear in mind that you’ll have to pay more interest overall if you take longer to pay off your mortgage.

If your circumstances change in the future and you’re able to pay more later on, you could possibly reduce your term again, but you’ll need to discuss this option with your
mortgage provider.

Take out an offset mortgage

Offset mortgages allow you to use your
savings to reduce the cost of your mortgage, so instead of earning interest on your savings,
you can cut the amount of interest you pay on your mortgage.

You can still access your savings but be aware that your mortgage payments will increase again if you dip into them at any point. You may also have the option of linking up with friends or family savings, so they can help you while keeping hold of their own savings, depending on which mortgage provider you go with.

Pay more now so you can pay less later on

One way to cut the amount you’ll have to pay in the future is to pay as much as possible up front. This could be a good option if you know that your household earning capability will be reduced in the future, for instance if you plan to take parental leave or want to go part-time at work before you retire.

It’s all about planning ahead and could massively pay off in the long run. But remember that some mortgage providers and products might have a limit on the amount you can overpay. So always speak with your mortgage broker for advice before increasing the amount you’re paying.

If you would like some help in finding out how you can save money on your mortgage then please get in touch with us here or call us on 01702 746811

Picture courtesy of Canva March 2022