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Save £160 a month on mortgage repayments with expert tip | Personal Finance | Finance

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Analysts are predicting the Bank of England could increase the base interest rate again to three percent, putting pressure on lenders to increase the rates on mortgages. The central bank has continually increased rates in efforts to tackle inflation, which is currently at 10.1 percent.

Fortunately, there are many ways to reduce mortgage costs, according to Mike Staton, director at Staton Mortgages.

He urged people to get in touch with a mortgage broker as they are regulated and so are “obligated to act in your best interest”, and will have good knowledge of the market.

He said: “Make sure you do these three key things: 1) Check out their Google Reviews, 2) Ask the broker what experience they have, a new broker may not have fully developed their knowledge and could miss out on things, 3) Ask the broker how many lenders they deal with, some deal with as little as 23 lenders on their panel meaning that they may be less likely to get you a better deal than a broker who has over 100.”

He said increasing the term of a mortgage is a key way to reduce the costs of a mortgage.

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The mortgage expert said: “A £250,000 purchase with a 10 percent deposit over 25 years at 5.91 percent fixed for two years would cost £1,436 per month. By increasing the term to 35 years could save you £168 per month.

“Alternatively, if you think interest rates may have peaked already, the same deal on a tracker would see you get a rate of 3.24 percent at £895 per month, this is a significant saving and not an option to be ignored.”

David Robinson, co-Founder at Wildcat Law, encouraged buyers should shop around to get the best deal.

He said: “When you finish a fixed term with a lender you should always look to see what options are available with other lenders.

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“Loyalty does not usually pay when it comes to mortgage rates. Speak to an independent mortgage adviser and use the internet.”

He said one way people can save thousands on their repayments is by opting to overpay on their amount.

The financial expert said: “Whilst it may seem counter-intuitive when people are finding it harder to pay bills, in the long run the best way to save money on your mortgage is to overpay if you have any surplus income or savings.

“If you are sitting on money in cash savings, aside from leaving a rainy day fund, you may want to seriously think about using them to overpay on your mortgage as chances are your mortgage interest rate is going to be higher than deposit savings rates going forward. Over the life of a mortgage this could save you thousands in interest.”

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Lewis Shaw, from Riverside Mortgages, warned there is no guaranteed technique for reducing mortgage costs as every measure has a trade-off.

He said: “One way is to extend the term of your mortgage, which reduces your monthly payment. However, the downside is you will pay more in interest over the term.

“The other way to reduce payments is to opt for a variable rate mortgage as they’re now lower than fixed rates.

“But again, the trade-off is accepting the risk that payments could go up and down and being prepared for that.”

He also recommended overpaying on a mortgage as a way to reduce the total amount a person pays.

He said: “To keep costs down and get the best deal possible, talk to a great independent mortgage broker, ensure you’ve saved up as much for a deposit as possible, and always pay everything on time to bolster your credit score.

“In the longer term, overpaying your mortgage by as little as £50 a month extra can shave years off your total mortgage term and significantly reduce the amount of interest you pay.”

The increase of the base rate is expected to be announced after the meeting of the Bank of England’s Monetary Policy Committee (MPC), on November 3.

https://bigger.ga/save-160-a-month-on-mortgage-repayments-with-expert-tip-personal-finance-finance/

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