11 January 2017

Why New Year is a great time for making mortgage resolutions

While many people make new year resolutions to lose weight or drink less alcohol, it is a great time to look at your finances. The coffers will be depleted after the festive period so it makes sense to see whether you could save money on big-ticket items such as the mortgage.

With mortgage rates still looking incredibly cheap, and some great products out there including cash back and low or no product fees, it is worth checking with an independent mortgage broker such as SPF Private Clients as to whether you could qualify for a better deal than the one you are on.

The first step is to check your existing mortgage – if you are part way through a fixed period or the introductory period on a base-rate tracker, then it may not be worth switching. But if you have slipped onto your lender’s standard variable rate (SVR) you are probably paying more than you need to. If you are concerned that interest rates may rise this year, and you can’t afford to be wrong – that is, if rates did rise you would struggle to pay your mortgage – then a fixed rate makes a lot of sense. With two-year fixes available for less than 1.5 per cent and five-year fixes at less than 2 per cent, there are some very attractive deals out there.

Those borrowers who come to the end of a fixed rate or base-rate tracker offer period this year should plan ahead, making a diary note six months before it finishes so that you have time to find a new deal before moving onto the higher SVR. Most mortgage offers are valid for up to six months so it is worth looking forward, particularly when it comes to getting your paperwork in order. Since the Mortgage Market Review was introduced lenders take a more forensic look at your finances and will want to see six months of bank statements to check whether you can afford the mortgage so cut back on any unnecessary spending.

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