Save Money in 2017
This period could well be the greatest divide of mortgage rates in history. Some homeowners have locked in rates at under 1 percent, whereas others are stuck at 5 percent plus. If you are not on the best deal for your situation, how can you save money on your mortgage next year?
This article does not constitute advice.
Professional advice should be taken prior to acting on any part of it.
Your home may be repossessed if you do not keep up repayments on your mortgage or any other debt secured on it.
New affordability measures are restricting homeowners
The classic situation finds a homeowner on a Fixed Rate mortgage, who fails to organise their next move for the end of the mortgage term.
When the agreed mortgage finishes, they automatically move onto the lender’s Standard Variable rate (SVR), which is typically much higher.
When they realise that they could be saving money, they approach their lender, but they find they are restricted access the lowest rates, as new affordability measures are now in place, with stricter lending criteria.
The SVR trap
Forced to either stick on the SVR or take a Fixed-Rate product at a higher than market-rate percentage, these homeowners are not in a good position.
In December alone, data from Barclays and CACI data, shows that there will be £15,166,251,546 worth of maturities.
This means that thousands of homeowners will soon be paying millions in inflated SVR costs. Are you one of those?
Closing the gap: How can you pay less on your mortgage?
There are a few ways to help ensure you will pay less money on your mortgage.
Always plan ahead so you don’t fall into the SVR trap
SVR’s may seem attractive as they offer some flexibility, but don’t be fooled. Many also require commitment to the lender for a period of time, wrapped up in their T&C’s.
In addition, the SVR doesn’t track the Bank of England base rate. So, whilst the base rate is low for now, it doesn’t mean the SVR will be low. It is set by the lender, and the lender has the power to change it at any time.
Keep your finances in order, so you meet affordability criteria
Even doctors and dentists on a good income, can see issues with affordability calculations on their application.
If you have large debts or large expenses then this can throw a spanner in the works. Try to keep your finances in ship shape, not only for your credit score, but also to show the lender that you have a consistent surplus of income, to demonstrate you can meet their mortgage payments.
Work with a mortgage adviser
- A mortgage adviser can ensure that you have considered all your options when it comes to closing the gap to paying the lowest rate on your mortgage possible.
- They can help you with the application and prepare you for the affordability calculation, giving you a greater chance of success.
- A mortgage adviser will know the lenders that are able to offer better products for your specific situation, also increasing the likelihood that you will be able to get the mortgage you deserve.
Rates are expected to increase in the new year, so if you want to secure a low-cost fixed-rate mortgage, then now is the time to do the research, speak to the right people and make a plan.
Speak to Chris about your mortgage
If you would like us to undertake a review of your current mortgage deal or you are thinking of purchasing in the near future and require funding, please contact Chris for a free, no obligation appraisal.
Tel: 01403 780 770