Hello and welcome to the September edition of my monthly 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.
You may not have reviewed it in years so you could be paying much higher interest, higher monthly payments, or be on a longer term when you can afford to repay it sooner.
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Many people fall into the trap of going on to what is called a ‘Standard Variable Rate’ with their mortgage lender.
This means that your initial deal has expired and you’re usually on a higher rate, which can fluctuate if rates change, making it more difficult to budget your money effectively each month.
We recommend taking a look at which rate you’re on first and see when it expires, if not already.
If you’re on a Standard Variable Rate, then now is the time to look at your options. You have two choices at this point.
Either complete a rate switch with your current lender to go on a new deal with them if it’s available or, alternatively, look at re-mortgaging with another lender.
You may be able to 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 will be best for your particular situation.
You may have also received a pay rise or have started working in a better paid job in the time since you last took out a mortgage.
You might have taken out a longer term at the start of your mortgage to keep your payments down, but can now afford more, so it’s always worth reviewing your budget to see if you can reduce the term, or simply overpay each month to bring the interest payable down and essentially repay your mortgage sooner.
The other thing to consider is completing a re-mortgage to consolidate debt that you may have accrued over the years.
This must be considered carefully, and your mortgage adviser will discuss the pros and cons of doing this with you.
However, it can save you hundreds of pounds a month on your overall payments by putting everything into one manageable payment, with one interest rate, if your main priority is to give yourself more disposable income on a monthly basis.
The downside is that it may be spread over a much longer period of time, meaning more interest could be paid back in the long run, therefore you must weigh up what is more important to you when considering this.
The new interest rate you can get will depend on your ‘Loan to Value’, this is the amount your mortgage is versus the value of your property.
Lenders will generally conduct a new valuation of a property, either online or physical, when you re-mortgage, to determine what Loan to Value bracket you fall into.
Generally, the lower the Loan to Value percentage, the better the interest rate you’ll get, so it’s always worthwhile considering if you can reduce your mortgage balance further to obtain a lower Loan to Value bracket.
With autumn and winter nearly upon us, if you have a current mortgage, as well as existing debts, then now could be the time to review them and see if you can put yourself in a better financial position for the end of the year.
Hope you’ve found that useful and see you all next month!
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