Save Money - Think About Not Remortgaging!
For many people their current mortgage deals are coming to an end and they are having to move to a new mortgage to save cash.
But is it always the case that a lower rate mortgage is cheaper? On the face of it, if you can reduce your monthly mortgage payments by 0.
5% then you could be saving yourself a lot of monthly expense.
This could be a saving that you can spend elsewhere or if you are unlucky, just a reduction in the increase of the monthly cost.
Using mortgage comparison tables tell you what mortgage is the cheapest on the market today, but is it right for you.
More importantly, will it actually save you money in the long term? Although interest rates are static at the moment and expected to stay so for some months, some experts believe a reduction is on the cards in the short term.
So if you lock into a 2, 3 or longer fixed term mortgage, by the end of the term you might be paying more than a variable mortgage.
On the other hand, we could be surprised by further interest rate rises and then you would be winning.
That's the nature of this game.
But this isn't the only are in which you could be spending a lot more than you need to.
Look carefully at those best offers that you see in those mortgage charts and read the small print.
Look for the upfront fees - arrangement fees, legal fees etc.
Take a look at your existing mortgage, how much is involved in closing that? There may be exit and deed release fees.
These fees may also exist in the new mortgage - are they significantly higher than now? When you look at these fees, how much will you be paying to switch your mortgage? Many lenders allow you to add this to the borrowing, but then you are paying interest on them for the life of the mortgage.
Yet more money each month.
If you can afford to pay these fees at the time of the move then in the long term it's going to be cheaper.
But then look at your existing mortgage.
If you are having to pay £1,000, maybe even more to switch mortgage, could you instead pay off a small chunk of mortgage, or at least put that cash away in a high interest account instead? Then take a look at how that would reduce your payments - or work out what your net payments are after the money put aside earns some interest.
Changing to a new lender may not always be the right thing to do.
First, speak to your lender and see what monthly charges they can get you down to with your existing mortgage.
Then, instead of relying on comparison tables, speak to a few mortgage brokers and get them to do all of the maths for you and write down exactly what you will be left paying each month.
But is it always the case that a lower rate mortgage is cheaper? On the face of it, if you can reduce your monthly mortgage payments by 0.
5% then you could be saving yourself a lot of monthly expense.
This could be a saving that you can spend elsewhere or if you are unlucky, just a reduction in the increase of the monthly cost.
Using mortgage comparison tables tell you what mortgage is the cheapest on the market today, but is it right for you.
More importantly, will it actually save you money in the long term? Although interest rates are static at the moment and expected to stay so for some months, some experts believe a reduction is on the cards in the short term.
So if you lock into a 2, 3 or longer fixed term mortgage, by the end of the term you might be paying more than a variable mortgage.
On the other hand, we could be surprised by further interest rate rises and then you would be winning.
That's the nature of this game.
But this isn't the only are in which you could be spending a lot more than you need to.
Look carefully at those best offers that you see in those mortgage charts and read the small print.
Look for the upfront fees - arrangement fees, legal fees etc.
Take a look at your existing mortgage, how much is involved in closing that? There may be exit and deed release fees.
These fees may also exist in the new mortgage - are they significantly higher than now? When you look at these fees, how much will you be paying to switch your mortgage? Many lenders allow you to add this to the borrowing, but then you are paying interest on them for the life of the mortgage.
Yet more money each month.
If you can afford to pay these fees at the time of the move then in the long term it's going to be cheaper.
But then look at your existing mortgage.
If you are having to pay £1,000, maybe even more to switch mortgage, could you instead pay off a small chunk of mortgage, or at least put that cash away in a high interest account instead? Then take a look at how that would reduce your payments - or work out what your net payments are after the money put aside earns some interest.
Changing to a new lender may not always be the right thing to do.
First, speak to your lender and see what monthly charges they can get you down to with your existing mortgage.
Then, instead of relying on comparison tables, speak to a few mortgage brokers and get them to do all of the maths for you and write down exactly what you will be left paying each month.
