Time to reduce the cost of your mortgage?
A mortgage is many landlords single biggest monthly bill – and that makes it a prime opportunity for saving money.
Thousands of landlords spend hundreds or perhaps thousands of pounds on their mortgage each month, but a sizeable number of them will pay more than they need to.
There are two reasons for this. The first is borrowers failing to shop around for the best rate when mortgaging, while the second is not moving when short-term mortgage deals end.
Britain’s mortgage market is dominated by fixed rates and our favourite deal remains the short-term two-year fix.
Once initial mortgage deal periods end, people are generally free to leave.
But if they don’t arrange a new mortgage in time (which many don’t) they will move to a more expensive default standard variable rate.
And that’s why banks and building societies like short-term fixed rates too. Enough landlords don't move mortgages when they end for them to be a nice little earner.
The gap between the best mortgage rates and the average SVR has ballooned to 2.66%, according to a recent FCA report.
For a landlord with a £150,000 mortgage on a £200,000 property, the cheapest two-year fix could mean monthly payments of £625, while the cheapest five-year fix would carry a £689 bill.
The same mortgage on an average SVR of 4.75% would cost of £865. That means even fixing for two years could save £2,880 a year.
So, don’t fall into this mortgage trap. If you do one thing with your finances this week, check up on your mortgage.
See if you could save money now or mark the date when you need to re-mortgage.
Help required?
If you would like to speak to an adviser about your mortgage please do make contact and one of our qualified staff will be happy to assist.