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A couple of months ago, I asked the question, “How has Covid-19 affected property prices?”. It turns out that a pandemic has not dulled the cost of housing here in the UK, nor dampened people’s desire to move home. House prices and house costs have steadily been rising throughout 2020, and do not look to be falling anytime soon. But, as well as this, it turns out that home owners could be able to save thousands of pounds on their borrowing deals. Could you be making savings on your mortgage payments? Read on to see how you too could get a much better deal and pay far less money.
Could You Be Making Savings On Your Mortgage Payments?
In the last couple of weeks, some of the major mortgage lenders in the UK have announced significant rate cuts to their mortgage deals. And these also include deals for first time buyers. This article in the Daily Record talks about how both Nationwide and HSBC have announced mortgage rate cuts.
Plus, at the same time, they have announced that the deposit required has been cut from 15% to 10%. Making it easier for first time buyers to enter the market again. At the height of the pandemic in 2020, 15% deposits became the norm as lenders were concerned over the long term risks of people taking out long term borrowing. These new deals could really help first time buyers get on the property ladder in 2021.
But Could They Also Save You Money If You Have An Existing Mortgage?
Certainly it is worth taking a look to see if changing banks could save you money on your existing payments. Switching lenders could provide people looking to remortgage, switch rates, or those currently on a standard variable rate make some significant savings on their current monthly mortgage payment.
In fact, some recent research by Habito has shown that borrowers who are currently on a SVR (Standard Variable Rate) deal could be paying over £4000 interest per year by not switching. If you switch, by remortgaging, it could be one of the best ways to save money this year.
So what are the best ways to see if you can make these savings?
Speak To A Financial Advisor Or Mortgage Broker
You can often get good advice for free before even spending a penny. And it really is a good way of checking that you have everything in place and making sure that your circumstances are right. After all, this is one of the biggest purchases that you will ever make.
Use A Mortgage Repayment Calculator
To also get a better idea of how much you could be saving by moving mortgage lender or when initially getting a mortgage, a mortgage repayment calculator is a great tool. Such as this one from Mortgage Calculators. This calculator will help you to determine the monthly payments on a mortgage loan for a fixed-rate loan along with interest-only payments.
Plus, the website has some great advice and information.
Remember These Vital Items You Do Need To Have In Place
Finally, no matter what, you do need to remember to do all these vital things before applying for a mortgage deal. Or when thinking about moving lenders.
- Review your finances – limit the number of credit cards that you have and make sure you don’t miss payments. Try and look at least as though you are not a risk and have some financial responsibility to your lender.
- Check out your credit score, and see if you can improve it. You can easily check your credit score online at places like Experian. Once you have found out what your score is, there are several things you can do to improve it. Such as paying off credit cards, or removing old partners with poor credit scores from your utility bills and joint accounts.
- Save a deposit. Most banks and building societies want a 10% deposit right now.
- Get together proof of your income. This is easy if you are employed, as you just need your P60s and bank statements to show that you have a dependable income. But if you’re self employed it can get trickier. You will probably be asked to provide several previous years of tax accounts, and maybe even a statement from an accountant.
I hope that you have found this guide helpful. I am not financially qualified to discuss mortgages in any detail, so I would always advise you to seek a professional opinion before going ahead with any major decision. But I hope that you can save a whole lot of money on your mortgage payments this year using these ideas.