Top mortgage tips to help borrowers save money next year
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Top 5 mortgage tips for 2007
Friday, 22 Dec 2006 11:45
A new year also brings with it a new set of considerations for mortgages, from the expiry of fixed rates to choices about when to make an overpayment.
With this in mind, mortgage advisor John Charcol is giving borrowers its top five tips on what may need to be done to keep a mortgage from costing more.
Top five mortgage tips for 2007
1 - What to do if your fixed, tracker, discount or capped-rate mortgage expires in 2007
John Charcol recommends borrowers due to fall onto a lender's standard variable rate mortgage speak to their mortgage broker or financial advisor three months before their current deal expires to avoid paying extra.
"Resolve to take an interest in financial matters this year, particularly Bank of England rate changes. Your mortgage is normally the largest and most important financial commitment that you have, so changes in the economy will affect you personally," John Charcol advised.
2 - Reduce the term of your mortgage or get a debt consolidation loan or do both
You can cut almost three years off a mortgage term by increasing monthly payments by £100 on a £100,000 repayment mortgage, John Charcol calculates.
"A small regular overpayment can substantially reduce your mortgage term and total interest. . . if you feel your mortgage is a big factor in deciding when you can retire, you should seriously consider this."
The company also advises mortgage holders to review their debt situation to create a budget for each month.
John Charcol explained: "Get rid of any credit cards that you may have a tendency to over-use. Move credit card debt to a lower unsecured rate, or get advice on consolidating with your mortgage.
"In order to make the most out of raising the funds from your mortgage, you should not reduce your monthly payment, just redirect it towards the mortgage so that you are paying off the same debt but quicker.
"Most mortgage providers now allow overpayments of ten per cent per year so use this to clear down a good amount of debt in a year. Work out the monthly payments with interest and set yourself the challenge of clearing what was the credit card balance in one year."
3 - Get better insurance premium rates if you have given up smoking or lost excess weight
A better insurance premium may be offered to mortgage holders who have given up smoking for 12 months or have stayed within a policies 'normal' weight banding.
However, John Charcol does advise carefully reviewing what is included in a new critical illness insurance policy.
"Make sure that you are not cutting the comprehensiveness of your cover by opting for a lower price," John Charcol said.
4 - Check what changes a new job may have in store
"If you or your partner has now stopped working or have changed to part time or you have had children you should review what cover you now have and the possible consequences of the death or illness of one of you," advised John Charcol.
"Understand what your employer provides for death in service benefit, sick pay or income protection or permanent health insurance (PHI).
"If your sick pay allowance or death in service has changed then your income protection or PHI deferment needs to be changed to match and your life assurance may fall short."
5 - Review your buildings insurance
This, like car insurance, should be reviewed annually - your existing mortgage provider or bank may offer loyalty deals, explained John Charcol.