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How-to Guides » OLD GUIDE Cut your mortgage costs

Find out how to cut the cost of your mortgage by hundreds of pounds a month and become mortgage-free years earlier.

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OLD GUIDE Cut your mortgage costs

Get the best deal

How-to Guide Tips 13 tips on this task | Tweet

1) Shop around
Doing your research before signing up for a mortgage can save you a fortune. Make sure you compare the whole of the market before signing up for a mortgage.

Whatever you do, don’t just go straight to whichever bank you have your current account with – you could end up paying thousands of pounds more than you need to, for longer than you need to, by not shopping around.

2) Get free advice
There are plenty of mortgage brokers out there that are happy to offer you free mortgage advice. They may also have access to exclusive deals that you cannot get your hands on direct.

But always make sure that your broker is whole of market, and does not just deal with a panel of lenders, as they may not be able to get you the best mortgage for your needs.

3) Sort out your credit rating
Post credit crunch, it’s tough to get a decent mortgage without a great credit rating. So before you apply for a new mortgage, check your credit report. There are a host of things you can do to improve your credit rating, including ensuring you are registered to vote at your present address. Be sure to read How To Improve Your Credit Rating for other tips.

Compare mortgages at lovemoney.com

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Tips on this task (13)

3

banwoir said

Three years back we set our Mortgage at 4.79% for ten years, initially I thought we had done ourselves out of a few grand with interest rates still v low, however piece of mind does help - you never know what is around the corner for the next seven years. Hopefully people think this is a reasonable deal ?

Report on 13 November 2009 | Love 0 love
4

ACTed said

I think you did rather well - we're stuck on 6.05%.

Report on 13 November 2009 | Love 0 love
8

Daxter22 said

The long-term average interest rate in the UK (Bank of England) is around 5% and we all know that banks typically charge slightly north of this figure at any point in time. I think locking yourself in below 5% is a bargain especially for 10 years. While rates will fluctuate you have peace of mind in terms of fixed cost mortgage payments and (in times like we are seeing now) the bank can't swindle your rate like they have been (i.e. charging new buyers 7,8 or even 9% when the BoE rate is 0.5%. Of course rates are reallt tied to interbank lending (LIBOR) which is much higher than BoE rates as the banks are all distressed and unwilling to lend to eachother, but even so, you have done very well!
I recently moved house and the best rate we could get was 6.1% locked in at 5 years

Report on 09 December 2009 | Love 0 love
0

rahmant said

I have chosen not to buy a fixed-term product as my current variable rate is 3.5%. I will consider buying one when my varial rate increases to be higher than fixed term products available in the market. Do you think this is a good approach?

Report on 21 January 2010 | Love 0 love
1

bimbodarby said

Hi Rahmant
Unless I've not quite understood your comment, fixed rate offers are always higher than the variable rate at the time of the offer. That's sort of the whole point of them! By fixing your rate you are taking a calculated risk (or judgement) that interest rates at some stage during the period of your fixed mortgage will rise above that of the fixed rate.
Some get a fixed rate for peace of mind, but variable rates are never going to be higher than fixed rates. As interest rates rise, so will the current offering on fixed deals - they are always higher.

Report on 22 January 2010 | Love 0 love
2

girishkamath said

Like banwoir, I fixed at 4.79 for the five year (in the last year now) and have been making over payments regularly. I have now managed to reduce my term from 23 years to 13 years by increasing mortgage payments to what i normally overpay. (i.e. instead of paying say 600 as mortagage and 400 as overpayment, i requested the bank to collect 1000 as monthly and reduce my term) This was done without any fees even though I have fixed interest rate product. Also allows me to overpay and reduce my term even more if required.
Hope this helps others to reach this Goal

Report on 26 February 2010 | Love 0 love
0

xcurlyluciex said

We have just come to the end of our tracker mortgage (0.55% above base rate), overpaying over the whole 2 years. This has meant we have been able to cut 4 years off our mortgage term. We have now switched to a 5 year fixed rate at 4.89% and still plan to overpay slightly each month, think mortgage product fee was £499.
If you can afford to overpay, even by a few quid each month and the lender allows you to do so, then definitely recommend it, you can save paying a lot of interest and pay off your mortgage quicker.

Report on 02 March 2010 | Love 0 love
0

SarahLLee said

We've not even started looking for mortgages yet, as our property is not quite ready to go on the market. However, I was given a great tip by a very good and trusted independent financial adviser - to find the best mortgage deal, one needs to have at least a 20% deposit; if not, then it is almost certainly better to rent. Clearly this hasn't earned him any commission but he can be sure we will return to him with our business when we're ready.

Report on 03 March 2010 | Love 0 love
6

johncolescarr said

I can vouvh that a decent deposit is a good idea. We bought on a 100% mortgage n 2007 and we now cannot move mortgage company as we have no equity at all. Our fixed term has ended and we have gone to the SVR, which is 5.34%. This is less than the fix but we are now at the mercy of the bank and I don't think that 5.34% is a particularly good deal seeing as the base rate is 0.5%!
However, for a first time buyer, I would say 10% is a good aim (unless they can do more of course). Saving 10% can be a huge task in itself. 20% can make a house purchase unnatainable. At least with 10%, even with a housing crash, you can overpay and get back into decent equity.
We are lucky to be in a position to overpay to the tune of 50% of the monthy payment, but it will be a couple of years befoer we get decent equity back again and are able tomove/remortgage.

Report on 16 March 2010 | Love 0 love
0

stepearce said

Keep an eye out for those looking to remortgage - HSBC ran a FEE FREE mortgage offer a couple of years ago and may run it again soon - no set up, overpayment, porting or cancellation fees. If you argue enough you can get the advertised rate reduced, and it may be worth considering taking HSBC Plus for 12 months to get a lower rate on the mortgage: at the end of the 12 month Plus contract, you keep the lower mortgage rate. I managed to save myself 0.25% on my tracker this way. Having some sort of history with HSBC helps as well.
Its also worth knowing which banks are looking for mortgage customers - I believe that while HSBC are gearing toward the mortgage market, Lloyds TSB are more concerned with current accounts so are possibly not going to offer such a good deal for mortgages as its not where their current priorities lie.
One final point - HSBC, amongst others, do not use IFAs or comparison sites, as these all have fees for the bank which are essentially passed on to the customer in the form of higher rates. Do your own homework as well; I was told by an IFA that he couldn't get close to the deal I found for myself so it really can pay to spend some time looking from bank to bank and not on comparison sites or with IFAs. Happy mortgage hunting!

Report on 21 May 2010 | Love 0 love
1

pennya251299 said

Help I am a bit lost.... I have a 25% deposit for a mortgage and would like to pay a lump sum off in 2 years - what would be the best mortgage to go for? I was looking at moneybackmortgages - can anyone recommend this or is it better to go through a broker?

Report on 27 May 2010 | Love 0 love
0

ayersrock said

i am currently on a variable mortgage paying just 2.0 per cent above base. However i am thinking of moving over to a fixed rate mortgage as i know interest rates will go up in the next 3-6 months. Do you think i should stay as i am now or move to a fixed immediately. If you think i should move can you recommend any good deals currently on offer?

Report on 05 August 2010 | Love 0 love
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laralouise said

sarahlee. Good advice but i would be carefull the market is still frgaile and i have seen a lot of mortgage providers ask for 40% deposit so check it out before moving forward. I'm sure a good advisor will be able to find you a deal with only 20% deposit but you need more.

Report on 04 October 2010 | Love 0 love

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