Taking Out a Mortgage Could Save You £300 a Year.

A mortgage can be a valuable resource if taken at the right time.

With inflation steadily increasing alongside its European neighbours, it seems almost inevitable that interest rates will rise in response – possibly as early as the end of the year – has been historically low as a result of the financial crisis and for more than a decade. If this does happen, it could add £324.48 onto the average mortgage annually which will be a big shock to homeowners and house hunters. Already we have seen lenders including Barclays, HSBC, NatWest and TSB increase their mortgage rates with the much talked about ‘sub-zero mortgages’ beginning to disappear.

In a bid to help homeowners navigate the next few months, Britain’s leading online mortgage broker, Trussle, has put together a checklist to try and help the British public navigate a changing market.

1. Remember you can usually remortgage a full six months before your deal finishes. The advice from us is to take advantage of the current deals sooner rather than later. Previous research from Trussle found that people can save an average of £3,500 a year by remortgaging, which is equivalent to 15% of the UK’s average salary. You may have to pay an early repayment charge to your existing lender if you remortgage.
2. Do you qualify for a green mortgage? A green mortgage essentially rewards you for having an energy-efficient home by offering you more favourable rates. Check the status of the home you are currently in or any new purchase (A or B on your EPC certificates) as savings could be made here. Green mortgages can offer lower mortgage rates, cashback when you take out the mortgage, or additional borrowing at lower rates. NatWest, Halifax and Barclays are lenders who offer green mortgages, with NatWest offering a reduced rate on a two-year or a five-year fixed-rate mortgage, along with cashback.
3. Investigate part and part mortgages. If your income is not always steady (for example for those who rely on bonuses or commission payments) and you, therefore, need a lower monthly payment, part and part mortgages could be the way to go. This is where some of the loans are repayment and some are interest-only. Good brokers can fit these products to suit your needs and then make sure you have an overpayment clause to allow you to take advantage and pay off more when that extra income comes in.

1. Think about overpaying. While rates are low, now would be a good time to start paying that bit extra every month, or as a one-off, if you can. Check your criteria as most mortgages allow you to overpay by up to 10% per year and the amount that can be saved by doing this regularly is staggering. Overpaying by just £50 per month can knock almost 2 years off your mortgage and save you over £5,000 during its lifetime.

1. Ever thought about an offset mortgage? This links your savings account to your mortgage and means lenders will treat any savings you have like mortgage overpayments. You will still be able to dip into the savings you’ve chosen to offset, but this will affect the interest you pay. You will also need to have your savings and mortgage with the same provider.

1. If you are an FTB try to get as big a deposit as possible. A bigger deposit would mean lower interest rates when it comes to getting a mortgage. It also would make you more eligible for a mortgage at the outset. This might be the time to ask the Bank of Mum & Dad to help out – they probably have a lower interest rate than the standard lenders! This is also completely normal; research has shown that 40% of buyers now need family support to purchase their first home. Ideally, a 20% deposit is a good starting point but if a 25% were to be obtainable it is likely even better rates will be available. Trussle’s best first-time buyer mortgage is a 2 year fixed rate at 1.68% from Principality Building Society.

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