The start of a new year, when many of us are making resolutions, is as good a time as any to take a look at your finances and ensure you aren’t paying more than you need to for your mortgage. The mortgage is, for most people, their biggest monthly outgoing, so any savings made here can be considerable.
This year, it is perhaps more important than ever to ensure our finances are up straight. As we continue to live with the economic uncertainty created by the Covid-19 pandemic, with mortgage payment holidays coming to an end in March and the furlough scheme ending in April, saving as much money as you can while you can, makes perfect sense.
If you are on your lender’s standard variable rate (SVR), you will almost certainly save money by remortgaging onto a fixed or tracker rate. When you consider that the average lender’s SVR is 4.9 per cent, according to Money facts, while the average two-year fix is 2.49 per cent, you will pay nearly half as much if you remortgage, and potentially much less if you are able to get a cheaper fix.
Start with your existing lender – will it offer you a better deal? You should compare what it is offering with what is available from other lenders, rather than automatically assuming it is the best deal out there. A whole-of-market broker, such as AWS, will do the legwork for you, ensuring you get the right mortgage for your circumstances and helping you with the paperwork.
The good news is that despite the pandemic, mortgage rates remain at record lows with some excellent remortgage products available. What’s more, the value of your home is likely to have gone up over the past few months, so you may have more equity in your home. This will improve your loan-to-value so you qualify for an even lower rate.
If you are on a fixed or tracker rate which ends this year, make a note of the end date and start looking for a new mortgage three or four months before your current deal expires. This will give you plenty of time to apply for a new deal, ensuring you don’t slip onto the higher SVR in the meantime. Again, a whole-of-market broker is the best place to start your search.