The worldwide economic climate has been subjected to a spot of doom and gloom recently and tightening the purse strings is a current hot topic. Money saving may not be something you directly associate with your mortgage but reducing monthly repayments can free up some of your hard earned cash, allowing you to use it elsewhere.
In essence a mortgage is simply a large loan. The factor which makes mortgages different from other personal loans is based on the fact that a mortgage is secured on your property. If repayments are not upheld your home may therefore be repossessed.
As with most financial products and services there are many different types of mortgages on the market. In Britain alone there are around 8,000 different mortgage offers available so you will never be stuck for choices. It may seem confusing to have so many different possibilities but the upside is that increased availability makes the market more competitive. With mortgage providers all trying to stay ahead of their competitors, the options available to home owners and buyers are increased and so provide plentiful opportunities to save some cash.
A common occurrence with mortgage lenders keen to remain competitive is an introductory or initial fixed term rate. Attractive rates are often used by mortgage lenders to initially attract customers and get them on board. These rates tend to apply for a specified time period, after which your mortgage reverts to the standard variable rate. This is always a good time to start shopping around for other mortgage deals and if you find one, remortgaging is the next step in the process to saving more pounds.
Remortgaging your home is simply the process of transferring your outstanding mortgage debt from your existing loan unto a new loan, and all without moving home. Depending on circumstances you may not even have to change lender, therefore it’s important to ensure your calculations are correct and all costs have been considered before switching mortgage.
First of all, when researching mortgage offers make sure you compare like for like. If you currently have a repayment mortgage ensure you compare it against other repayment options. The same principle applies for interest only and all other mortgage types.
Remaining time period is another factor that must be kept the same during a mortgage comparison. If you have ten years left to run on your current deal then you must compare this with a new ten year deal otherwise you will be creating a false economy for yourself and may end up paying out more in the long run.
Some likely fees and charges you need to account for when doing your sums include an arrangement fee, a valuation fee and any associated legal costs. Most mortgage deals carry a redemption fee for settling the borrowed amount before the end of the set term so check what this will be before making any definite plans to switch mortgage.
Paul McIndoe writes for a digital marketing agency. This article has been commissioned by a client of said agency. This article is not designed to promote, but should be considered professional content.
