The average mortgage payment in the UK is £723 per month with an interest rate of 2.48%, according to property experts. However, repayments vary greatly depending on many factors.
Whether you’ve got your eyes set on a property already or you are simply exploring the real estate market, one of the most important questions you need to ask yourself is: How can you make your mortgage payments more manageable?
Some tips can help keep your mortgage costs as low as possible.
#1. Avoid banks, go with a broker
Unlike a banker, a mortgage broker can help find the right mortgage deal for your situation. Brokers are more likely to get you a special rate from money lenders through their connections. As a unique client, you can’t negotiate a lower deal. Yet, a broker can rely on the volume of business they generate to obtain the best possible deal for you.
Additionally, brokers are also more likely to manage your fees and application process, helping waive high costs in the process.
#2. Consider your deposit
Typically, your down payment will range between 20% and 40% of the property value. While you can secure mortgage loans with as little as 5% deposit, you want to make sure you can save ahead for your down payment. Being able to pay upfront a high deposit has two important advantages:
Firstly, it can make your price offer more attractive to the property seller.
Secondly, it also reduces the total mortgage amount, which means you can make monthly payments more affordable.
#3. Improve your credit score
Your credit score affects your creditworthiness, aka the kind of loans you can apply to. You are more likely to find cheaper mortgages with a higher credit score. Boosting your credit score takes time. Check your annual credit report to review the data available about your finances. Errors can have serious consequences, so make sure credit report agencies have the right data. If you have a joint financial product with your partner, it’s worth checking that their financial history doesn’t affect your score.
#4. Refinance your mortgage
In essence, refinancing your mortgage means you take out a new loan to replace the former mortgage. Refinancing can save you a lot of money if:
- Your credit score has improved significantly
- There are better mortgage deals available with lower market interest rates
- Your home’s value has gone up, so you’re available for lower rates
You don’t have to wait for your current mortgage to come to an end, and you can search for a better deal up to 6 months before your current deal stops. Typically, mortgages provide a fixed rate deal for 2 to 5 years, after which your interest rate may increase.
#5. Overpay your repayments
Not every lender is happy to let you pay more than agreed per month. However, if your lender is willing to let you increase your monthly payment amount, it can be worth considering repaying your mortgage sooner. It’s a great option for those who have made unexpected capital gains through inheritance or non-taxable wins.
Keeping your mortgage fees as low as possible is no easy task. However, you have many options to ensure you get the best deal and manage your wealth in the most profitable way.
