Move your mortgage and save over £3000 a year

Invariably the most expensive thing you'll ever buy is your house so if you've already made the leap onto the property ladder it follows that this is the first place you should look to make savings. Anything you can do to cut the length of this loan and the amount of interest you pay will help to reduce the cost of your home significantly.

Could remortgaging save you money?

It used to be that a mortgage was for life, or at least for as long as it took to pay for your house outright. However this is no longer the case. If you’re currently paying your lenders standard variable rate (SVR) or are nearing the end of a fixed mortgage deal, remortgaging is definitely something worth looking into.

The idea of remortaging is to guarantee yourself a better rate than you are currently paying. This can potentially help to reduce your monthly repayments, the term of your mortgage and the total amount you'll pay back in the long run.

For example, if you’re currently paying a lender’s SVR of 7.79% on a £160,000 repayment mortgage with a 20 year term remaining, you could save up to £216 a month simply by remortgaging to a 4.98% deal. This works out as over £3150 saved in interest repayments a year! Obviously the exact amount will depend on your circumstances however it just goes to show that for a little effort the rewards could be huge.

For the biggest savings you should remortgage to a cheaper deal but arrange to keep your monthly repayments the same. This will mean that although you’re not paying a penny extra, more of your money is going towards clearing your outstanding balance rather than being wasted as interest, helping you to pay off your mortgage even sooner.

Before you even begin comparing mortgage deals you'll need to know what you are currently paying. Although you're likely to have a good idea of your monthly repayments you will also need to know the current APR, remaining number of years and outstanding amount left on your mortgage. Once you have this information you'll be in a position to begin your enquiries.

Here comes the but….

Unfortunately remortgaging isn't as simple as just switching to the cheapest rate as there are arrangement and valuation fees to consider along with those charged by your solicitor. If you are tied into a deal you will also need to take into account the cost of any early redemption penalties imposed by your current lender. So, when comparing different mortgage deals its important to include all these associated costs in your calculations. This will enable you to make a true comparison which is especially important if you will need to borrow further to cover these costs. Some providers are willing to contribute towards remortgage fees as a means of attracting new customers so if the interest rates are attractive deals of this nature could be worth looking into.

Mortgage best buy tables can be a good place to start as these will give you a general idea of the types of deals available. However it is best to have a chat with an independent, qualified mortgage advisor. Even if you have a good understand of the mortgage options available, mortgage advisors can offer further advice and provide details of the latest offers. This will save you time and effort and give you confidence that you’re getting the best deal possible. What's more, as their fee will be paid by your chosen mortgage lender, using an advisor should not cost you anything extra.

When looking to remortgage it's important to seek advice from an independent mortgage advisor as they will be able to search the whole of the market to find you the best deal. Tied mortgage advisors on the other hand will only be able to offer you mortgage products from the specific companies they represent, narrowing your options and saving potential considerably.