2023 is officially here. The optimistic feeling of a clean slate leads many of us to consider what sort of resolutions we’d like to implement over the coming months. If you’re not quite sure where to begin, taking a look at your mortgage is a great place to start.
Now that all the festivities and celebrations are firmly behind us, it’s time to start getting serious about what we want to focus on during 2023. Organising one’s finances is often up there with the top resolutions on many people’s lists. However, it can be difficult to know where to start, and what to do to make sure you have your financial situation in order.
A great place to begin is by taking a look at your mortgage and considering how you can best take control of your mortgage repayments during the coming year, so as to ensure that they don’t become overwhelming and difficult to manage. Today, we’d like to give you a handful of our top tips for taking control of your mortgage and starting 2023 on the right foot. Without further ado, let’s get stuck into it!
Fixed-rate deal ending soon? Be proactive!
The majority of mortgages come with an initial fixed period of two to five years, generally speaking. Once that fixed-rate term is over, you will be moved onto your lender’s Standard Variable Rate (SRV).
But what does that mean exactly? Well, your lender’s SRV is determined by them, it can be changed at any point and it tends to be significantly higher than the fixed-rate you are currently paying. This means that moving onto your lender’s SRV will likely trigger a noticeable increase in your monthly repayments.
Here at The Mortgage Brokerage, we strongly recommend starting the process of remortgaging as soon as possible when you know your fixed term is ending soon. Shopping around for a cheaper rate, around three to six months before your fixed-term ends, will mean you are able to avoid any delays that will leave you stuck with your current lender’s SVR.
Not quite sure where to start? Not a problem. Here at The Mortgage Brokerage, we can guide you through the process of remortgaging and help you to secure a great deal so that everything is in place for when your fixed-term ends.
Be mindful of the base rate
It’s important to bear in mind that changes to the Bank of England’s base rate will significantly impact the interest rate on your lender’s SVR.
The current Bank of England base rate stands at 3.5%. It was increased on December 15th 2022 by 0.5%. This was the ninth rise recorded within the space of 12 months, pointing to significant economic instability (no surprises there!).
If you are currently on a variable-rate mortgage deal, a base rate change – or even speculation that one may be up ahead – will likely have an impact on your repayments.
If you’re on a fixed-rate deal, however, you won’t feel the effects of this rise until your fixed-term ends and you are moved over to your lender’s SVR.
Instability with the Bank of England’s base rate thus stands as yet another reason to be mindful of avoiding your lender’s SVR. Take steps towards switching to a new mortgage deal well before your fixed-term ends and speak to one of our advisors today.
Make overpayments if possible
The majority of mortgages permit borrowers to overpay on their monthly mortgage repayment without an applied charge, typically by up to 10% of the outstanding balance.
Take a careful look at your finances and consider whether or not you can afford to overpay. Making overpayments if you can afford to is a fantastic idea as it enables you to get ahead with your mortgage and work towards paying it off earlier. In the long run, this will save you a considerable amount in interest charges, so it’s certainly worth your while!
Worried about repayments? Speak up!
If, at any point, you’re worried that you may not be able to manage some of your repayments this year, don’t just bury your head in the sand. Seek help.
Make sure to speak up and contact your mortgage provider if you think you aren’t going to be able to make a repayment. This is essential in order to avoid losing your home. The vast majority of lenders will be more than willing to help you and work out a solution.
As soon as you think you are going to struggle to meet a repayment, contact your lender. They will likely suggest one of the following arrangements:
- They may agree to extend the term of your loan, thus lowering your monthly repayments and hopefully making them more manageable.
- They may agree to accept smaller payments in the short term.
- They may offer a mortgage payment holiday, wherein you stop making payments temporarily. Of course, it’s important to be aware that any unpaid payments will still be tagged onto your overall debt.
For carefully tailored help and advice regarding your mortgage, contact us today.
