Mortgage Guide – When To Make Changes

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Mortgages are a complicated subject. Most of us stick with the one we’ve got because it’s easier. But in actual fact, making changes to your mortgage can actually make incredible savings…

Should I Remortgage?

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Remortgaging alone can make huge savings. But it’s completely reliant on what kind of mortgage you have. It also depends on how tied in you are to your current deal.

Bear in mind it’ll cost you to remortgage, regardless of how big the savings are in the long run.

If like most of us, you find the huge amount of mortgage options mind-boggling, get help. Going through an independent financial advisor will help find the best deal – and needn’t cost you too much.

Changing Mortgage Companies

Whether you’ve just left a tie-in with a fixed-rate deal or you’re wanting to increase your savings, changing mortgage company can save you a bomb. To do so you need to apply for mortgage refinancing from other lenders.

Whatever deal you’re offered – by a broker or lender – check the small print for the cost of moving from your existing deal.

If you might sell up before the mortgage payments finish, get a deal that has no closing costs. The interest rate will be slightly higher, but it’ll be worth it if it’s only for the short term.

Should I Move My Debts To My Mortgage?

You know the phrase that begins “Your home is at risk if you do not keep up repayments…”? That’s because your mortgage company can take your home from you if you fail to repay what is essentially a massive loan. This is why mortgages are cheap. They have lower interest rates than other loans because your home is the asset it’s secured against – so the risk is less for the lender.

So any other kind of loan is less risk for you – but more risk for the lender. This is why the interest rate is higher on other loans.

Therefore, you need to compare the cost of:

  1. Having that debt with your mortgage company over the remaining time of your mortgage;
  2. Having that debt with the next best alternative loan for the time you’d have the loan.

The longer you have a debt, the more it costs. This is because you pay interest on the interest.

Remember: if you transfer your debts to your mortgage, you’re essentially remortgaging. This is because you’re changing the agreement of your current mortgage deal.

Should I pay off my mortgage with savings?

You should almost always pay off debts with savings. Interest rates on debts are usually far higher than the interest rates on savings.

However, mortgages are cheaper than other loans because of their lower interest rates. So it’s usually better to pay off other loans/cards before your mortgage.

If you’re considering paying off your mortgage with savings, first work out how much interest your savings could earn you over that time. Compare this to how much you’d save on your mortgage repayments.

Finally, be wary of repaying with savings that you think you may need to use in the near future.