There are 26.4 million households in the United Kingdom according to the Office for National Statistics. About 18 million of these households have families living in them with a surprisingly large amount, at around 7.5 million, living alone.
House prices over the last 12 months have also increased on average by just under 3%, which from a mortgage payer perspective means there loan to value (the amount owed on the property compared to the value of it) may well have improved and this factor is vital when it comes to seeing what remortgage products and rates you qualify for.
Now as around 8 million households are grappling with a mortgage on their home the shrewd home owners will be very mindful of the cost of not remortgaging at the right time and will proactively pursue the best mortgage deal they can before any current deal comes to an end.
Many of us though will just leave their mortgage ticking along with the current provider long after they were released from any early repayment charges on their deal at which point they were able to go and seek an alternative, hopefully cheaper mortgage product.
Some tips to help you avoid the pitfall of not reviewing your mortgage:
>>> Be aware of when your current mortgage deal ends.
You may have a discounted period or a fixed rate for a set number of years. Make a clear record of this along with setting some form of reliable reminder at least 3 months before that deadline hits. You can then time your remortgage strategy to perfection.
>>> Check out any early repayment charges (ERC’s)
The vast majority of mortgages taken out have some charges included in your contract that will be activated if you move your mortgage or even change the product with the same lender for a set period from the mortgage outset.
These are called `early repayment charges` and they must be detailed in your mortgage documentation so look them up and be aware of how much it will cost you now to exit your mortgage and when that early repayment period ends.
That can be critical to establishing whether it is time to remortgage as you can see if the costs are outweighed by the savings.
>>> Spend a little time using a remortgage calculator.
Your mortgage is likely to be the biggest financial burden you will ever have to deal with. First Choice Finance have built a remortgage calculator that enables you to see how your payments will alter at different mortgage interest rates.
It is a genuine surprise to many people how even a small change in percentage mortgage interest rate will impact your monthly payment and therefore your household budget.
For example a 20 year term remaining on a repayment mortgage of £125,000 running at 4.5% APR will be costing £801 per month, but at 4.0%, just a half percentage reduction, it would drop to £766, providing a saving of £420 per annum.
If your loan to value has improved and you get the timing right you could even see drops of up to 1.5% of your current rate, which on this example could put you on a deal at 3.0%APR and improve your cash flow by very useful £1200 per year.
Some mortgage brokers provide qualified mortgage advice through their own advisers and can scour the market on your behalf to help find you the best deal. First choice finance offer this service so if you are interested in seeing what your options are take a look at their website.
A lot of this is common sense, but it never harms to remind ourselves to be vigilant and stay on top of our major finances by being aware of what our mortgage obligations are, researching what else may be available to us and timing the remortgage to minimize our cost of remortgaging whilst maximising our savings.