Little-known mortgage trick could save you thousands – here’s what to do

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Millions of families may be prepared to see their monthly mortgage repayments increase, but a little-known trick could save you thousands.

Bank of England poised for growth Rate of interest This could have a knock-on effect for tomorrow, and any household with a tracker or variable mortgage Rate.

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A Little-Known Trick Could Save You Thousands on Your Mortgagecredit: getty

But it is also a problem for borrowers at the end of their fixed-term mortgage deal.

As interest rates rise, mortgage providers pull their cheapest prices. deal – And that means you can increase your monthly repayment when it comes to finding a new payment.

But a little trick can save you.

Many homeowners don’t realize they can move out of their fix. mortgage deal quickly.

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Typically, mortgage providers will let you lock in a new deal Three months — or in some cases six months — before your current one ends.

This means that homeowners can secure the best rates now, before interest rates rise.

But if you’re a fixed-rate borrower, you may not know that lenders often allow you to lock in a new rate for up to six months before your current one. deal ends.

Many wait until their present loan Before signing a new offer has run its course.

L&C Mortgage Associate Director David Hollingsworth said borrowers are coming to the end of their current loan You should act sooner rather than later.

He said: “Mortgage offers from many lenders are valid for six months, which means you can apply for a deal right now, even if you may not be able to finish on it for four or five months.”

The average fixed two years as per L&C mortgage The rate has tripled from 0.89% to 2.71% since October last year.

In the last one month itself, the average two-year fixed deal has increased from 2.36% to 2.71%.

These rate hikes can have a big impact on your monthly payments.

If you have a mortgage of £150,000 over a period of 25 years with an interest of 2.75%, your monthly payment would be £693.

But with an interest rate of 3.25%, your payment will increase to £731 – about £460 more per year.

Most homeowners choose a fixed-rate mortgage because it gives you certainty over your monthly payments for a set period, and protects you from interest rate increases.

Anyone with a variable or tracker mortgage rate will see their monthly payment increase every time the Bank of England raises rates.

This is a major problem for many households at the moment, which are already battling with rising electricity bills, petrol prices and more.

But locking in a decent mortgage rate can help enhance your home finances.

How do I Find a New Mortgage Deal?

If your fixed rate mortgage deal expires, your lender will either take you on a standard variable rate (SVR) mortgage if you do nothing, or you can re-mortgage.

If you choose to re-mortgage, you can either try and get a new deal with your current mortgage provider, or shop around to find a different mortgage provider that offers a better deal. Huh.

A mortgage broker can assist you with this process.

They search all over the market and give the best advice mortgage deals for you.

One thing to note when agreeing to a new fixed rate ahead of time is that the deal will last from when you agreed, not when you actually move at that rate.

So if you agree to a fixed two-year deal now, but don’t move on to that new rate for three months, you’ll actually only pay that rate for 1 year and 9 months.

If you’re staying with the same mortgage provider, however, it may be possible to move on to the new rate first — so it’s worth asking.

Keeping monthly payments as low as possible can help families struggling to pay Bills,

Some homeowners are opting for ultra-long mortgage terms to reduce their payments – but this could cost you more in the long run.

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Typically, mortgage terms are 25 years, but you can opt for a 30 or 40 year mortgage.

you can also get Fixed deals for up to 40 yearsIf you want certainty on your payments for an ultra-long term.

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