How to Save on Your Mortgage

It is currently one of the best times to get a mortgage. The interest rates have hit an all-time low in an attempt to stimulate the UK economy. It’s a great time to take advantage and get on the property ladder without spending a large amount of your income.

According to Which, UK homeowners spend, on average, between 19% and 45% of their salary on mortgage repayments. What can you do to make sure you’re getting the best mortgage rate?

Shop Around and Use a Broker

The mortgage industry is competitive. Shop around and find a broker that will help you find the ideal mortgage for you. They can help you identify ways to save money.

There are often special offers or starter mortgages to get you on the property market, which your broker will know about. You may be able to start out with lower repayments. Certain deals may be based on your location, or your individual situation, such as whether you are a first-time buyer. Mortgage brokers can help you to identify the best deals and options for your unique scenario.

Overpay Where Possible

If you have a mortgage that allows overpayment without penalty, it’s a good idea to take advantage of this. By paying more when you can afford it, you can save money in the long run, and pay your mortgage off quicker.

L & C Mortgages explain that with a £150,000 repayment mortgage borrowed over 20 years with a 2.25% interest rate, overpaying by just £50 a month can pay off the mortgage over two years quicker. On top of this, you’d save almost £5,000 in interest in this scenario.

Pay Mortgage Fees Upfront

Many mortgages give you the option to add the mortgage fees to the value of the lending. This might be tempting in the short term, especially when you consider all the other costs of buying a home.

However, by doing this, you will get hit with interest in the long term. It may even make more sense to take advantage of a short-term loan to pay off the fees, rather than paying interest on them for the length of your mortgage.

Don’t Pay for Bundled Home Insurance

In a lot of scenarios, home insurance comes bundled into your mortgage. It makes sense, as you may legally need building insurance to take out the mortgage. However, you typically won’t get the best rates with your mortgage lender.

Work out what the home insurance is costing you, and then use a price comparison website to check what others will offer you. It might surprise you to learn how much you could save. The Money Advice Service provides tips on how to get the best rates for your home insurance.

Do Your Research

Looking for a mortgage can be one of the most stressful parts of purchasing or owning a home. There are many things to take into consideration to ensure you are getting the best possible price. Luckily, hiring a mortgage broker, or doing your own research online, will go a long way in getting you the best mortgage for your needs.