Top 5 Tips for Saving on Your Home Loan
Your home loan is often one of your larger monthly bills and most people will be paying it for 25 -30 years. For a lot of people we are paying for a mortgage while bringing up a family, the largest expense we will have! So it makes sense to spend a few minutes checking if we could be paying less on our mortgage. Saving even a little on home loan means a lot!
Prepay Your Home Loan.
If you are lucky enough to have spare money it will not be making a lot in a bank. The interest rate is so low that you will get little interest so it makes sense to use the money to pay off the home loan earlier. You need to check the facilities on you home loan account first though, some lenders have penalty clauses if you prepay over a certain amount.
Consider Remortgaging
You shop about for a good deal on onions and electricity. It makes sense to shop around for a good deal on your home loan. If your current deal is due to end, and you are about to be put onto the Standard Variable Interest Rate, this is likely to cost a lot more than the deal you were on. Look around at deals with different lenders before your home loan agreement ends, and you can save yourself a lot of money. If you have a while to run before your home loan agreement ends you will probably have to pay a prepayment penalty, so you need to check whether the new deal added to the penalty fee will make you any better off.
Don’t Rely Solely on your bank!
It’s lovely to think that your bank knows that you are a good loyal customer and that you manage your money well, and will give a fantastic deal. If this was the way the world worked, it would be really nice, but it’s not the way it works in reality. Often best deals are available for new customers, and loyalty is worth nothing!
Check Out With a Mortgage Broker.
Some deals are only available through mortgage brokers, but not all brokers can check all mortgages. If you use a broker ask them if they can check every deal with every lender. If you are not happy with the results, don’t use them. Check how your broker is paid, do you pay them or are they on commission? An ‘on commission’ broker can be less independent, although cheaper for the customer. They have to tell you about any commissions they will receive before advising you. If your broker doesn’t, check! Check the advice from a broker against a mortgage comparison website.
Check Whether Your Payment Protection Insurance is Suitable
Protection against accidents, unemployment and sickness is generally a good idea as there is little state help available during such times. Having said that, not all policies are equal. If you are self-employed it may not cover you. Some public sector jobs have generous permanent disability benefits, so it would be better to have a policy to cover against redundancy only. Check what cover you will get and whether it fits your needs.
