Your mortgage is probably one of your biggest monthly bills, so a saving of a small fraction of the monthly costs of your remortgage could result in a huge saving in your monthly household bills. So here are some ideas to reducing the expenses.
A bit of a contradiction to start off with. First, shop round, but secondly, stay where you are!
Why contradict myself to start off with? Well, not every rule applies equally to every person and some people can make cost savings whereas other people using the same techniques might end up out of pocket. And this starts with moving to a new building society.
If you shop round you might find that a building society can offer you a much lower rate of interest than your existing lender is charging you. This could result in a huge monthly saving. But, this is not guaranteed. Even though the monthly payment looks lower you have to also look at the associated charges with moving building societies. There will be the charges for ending the remortgage as well as the charges for setting up a new remortgage.
There are a couple of options for these charges. Firstly, you can pay the charges up front, which saves the interest fees. But, what else could you do with this money? Alternately you can add them to the mortgage, which increases the fees again. Before you decide to move to a new building society, check very carefully all of the charges and weigh them up.
Maybe the best way to save on your monthly costs, if your bank will allow it, is to pay off a chunk of the mortgage. But many building societies do not allow this or will hit you with high fees with each payment. These fees will reduce the impact of any savings, so calculate carefully whether it works for you.
Your building society might be willing to move you to an alternative mortgage product within their portfolio of mortgages, for example a fixed rate or a capped rate, if you are currently on the standard variable rate. Speak to your building society and make it clear that you are considering moving and ask them what is the best that they could offer you. This threat of moving may just be enough to get them to try to tempt you into staying by offering you a better deal, with the negative being there is a tie-in period. This is fine, as long as you are not intending to move within the next few years.
Ultimately, these are three of the possible ways of reducing your monthly remortgage repayments. Either move to a new building society, move within the building society or reduce payments by paying off a chunk of the mortgage. Some people do, in desperation, reduce their monthly repayments by extending their remortgage term, but this is not advised. The problem with this is that it is only extending the repayment of the debt and increasing the total amount of interest you are paying. In the end, you pay plenty more.
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Written by Keith Lunt of compare mortgage rates . If you want to know more about mortgages , call in!
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