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Top 10 tips for reducing your mortgage payments
When you first took out your mortgage your Lender whether Bank or Building Society would have offered you a discount on their SVR to get you to take out the mortgage with them.
When this discounted rate mortgage comes to an end the Lender banks (cheap pun) on you going onto their standard variable rate.
Currently 25% of borrowers pay their Lender’s SVR from data supplied by the Financial Conduct Authority (FCA).
From the Lender’s point of view this business model is successful as the Bank or Building Society has tempted you into a discounted deal for on average 2 to 5 years and if you don’t remortgage you’ll be charged their SVR for the remainder of the mortgage term usually their highest mortgage rate.
An example based on a £100,000 mortgage to help you work out how much you could save: a typical fixed rate mortgage with a remaining balance of £100,000 could work out at around £151.37 cheaper compared to the average standard variable rate. That’s a potential saving of over £1,816 over a year.*
If you’re your Lender’s SVR make sure you shop around to see whether you can get a better deal either by switching to a different provider or getting a better rate with your current provider.
*Calculation based on best available 5 year fixed rate remortgage with LTV of 75% and an interest rate of 3.42% and the Lender’s SVR of 5.24% information correct as of September 2022 rates and savings will vary depending on Lender and future interest rates.When you first took out your mortgage your Lender whether Bank or Building Society would have offered you a discount on their SVR to get you to take out the mortgage with them. When this discounted rate mortgage comes to an end the Lender banks (cheap pun) on you going onto their standard variable rate. Currently 25% of borrowers pay their Lender’s SVR from data supplied by the Financial Conduct Authority (FCA). From the Lender’s point of view this business model is successful as the Bank or Building Society has tempted you into a discounted deal for on average 2 to 5 years and if you don’t remortgage you’ll be charged their SVR for the remainder of the mortgage term usually their highest mortgage rate. An example based on a £100,000 mortgage to help you work out how much you could save: a typical fixed rate mortgage with a remaining balance of £100,000 could work out at around £151.37 cheaper compared to the average standard variable rate. That’s a potential saving of over £1,816 over a year.* If you’re your Lender’s SVR make sure you shop around to see whether you can get a better deal either by switching to a different provider or getting a better rate with your current provider. *Calculation based on best available 5 year fixed rate remortgage with LTV of 75% and an interest rate of 3.42% and the Lender’s SVR of 5.24% information correct as of September 2022 rates and savings will vary depending on Lender and future interest rates.
Stop paying your Lenders Standard Variable Rate (SVR)
When you first took out your mortgage your Lender whether Bank or Building Society would have offered you a discount on their SVR to get you to take out the mortgage with them. When this discounted rate mortgage comes to an end the Lender banks (cheap pun) on you going onto their standard variable rate. Currently 25% of borrowers pay their Lender’s SVR from data supplied by the Financial Conduct Authority (FCA). From the Lender’s point of view this business model is successful as the Bank or Building Society has tempted you into a discounted deal for on average 2 to 5 years and if you don’t remortgage you’ll be charged their SVR for the remainder of the mortgage term usually their highest mortgage rate. An example based on a £100,000 mortgage to help you work out how much you could save: a typical fixed rate mortgage with a remaining balance of £100,000 could work out at around £151.37 cheaper compared to the average standard variable rate. That’s a potential saving of over £1,816 over a year.* If you’re your Lender’s SVR make sure you shop around to see whether you can get a better deal either by switching to a different provider or getting a better rate with your current provider. *Calculation based on best available 5 year fixed rate remortgage with LTV of 75% and an interest rate of 3.42% and the Lender’s SVR of 5.24% information correct as of September 2022 rates and savings will vary depending on Lender and future interest rates.
Stamp Duty Rates
Although your monthly outgoings have reduced you are extending your debt over a longer period of time and may end up paying more over the term of the mortgage.
Using the equity in your home and utilising the capital built up reduce your outgoings, but once the equity has been used the loan to value in your home will have increased.
Removing your debt and reducing your monthly payments is great but if you follow the same spending behaviours you could end up in the same situation again with no equity in your home to ustilse again.
