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Daily Express - Comment on reducing mortgage costs

ended 28. October 2022

A journalist on the Daily Express is looking for expert views on how to reduce mortgage costs, in the long term and short term.

Questions:
- What can people do to reduce their mortgage costs?
- What steps should people take to make sure they get the best mortgage deal?
- How much could a person save?
 

We need concise answers to these questions - thanks.

15 responses from the Newspage community

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Ranald Mitchell
Director at bad credit mortgage specialists Charwin Mortgages
Anyone looking to reduce mortgage costs should perhaps look beyond their mortgages in isolation. Wider household economics such as unsecured loans, credit and store card debt as well as costs of insurance can be equally burdensome, if not exceeding mortgage payments. Speaking to a professional about the merits of "tidying up" some of these can prove very beneficial for many people, reducing overall outgoings and creating a more financially resilient situation. Should a household financial review not be the answer, there are limited options, such as temporarily extending your mortgage term for a period of time, offsetting mortgages for those fortunate enough to be holding cash in bank accounts, or even making a capital reduction in the amount owed on a mortgage.
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Mike Staton
Director at Staton Mortgages
There are many routes to reducing mortcgage costs. You now have the opportunity to increase your mortgage term & switch to interest only, however these can be costly routes in the long run. If you are not speaking to a mortgage broker you are missing a trick, mortgage brokers are qualified professionals who know the market, have experience in dealing with lenders but most importantly are regulated which means they are obligated to act in your best interest. Make sure you do these 3 key things, 1) Check out their Google Reviews, 2) Ask the Broker what experience they have, a new broker may not have fully developed their knowledge and could miss out on things, 3) Ask the broker how many lenders they deal with, some deal with as little as 23 lenders on their panel meaning that they may be less likely to get you a better deal than a broker who has over 100. A 250K purchase with a 10% deposit over 25 years at 5.91% fixed for 2 years would cost £1436 per month, by increasing the term to 35 years could save you £168 per month, alternatively, if you think interest rates may have peaked already, the same deal on a tracker would see you get a rate of 3.24% at £895 per month, this is a significant saving and not an option to be ignored
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Imran Hussain
Director at Harmony Financial Services
- What can people do to reduce their mortgage costs? The first thing anyone should do is seek advice, as everything is best, based on your circumstances and needs and a proper review of your outgoings on things you pay for and no longer actually use the best way to ensure you are getting the best mortgage deal is not online it's actually getting a broker involved as early as possible as the difference could be thousands in savings over the longer period for the nominal cost of using a broker.
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Rita Kohli
Managing Director at The Mortgage Stop
What can people do to reduce their mortgage costs? If you find yourself needing to reduce your mortgage payments each month, the most important thing you can do is seek professional advice. You can get this from your lender or an experienced mortgage broker who will help guide you through the process and offer their expertise. The type of mortgage deal you have will largely determine your options. If you're on a fixed rate, for example, Early Repayment Charges may limit what you can do. In most cases, though, if the lenders' affordability and lending criteria are met, they may allow an extension to the term - although this probably means the overall cost of the mortgage increase. Some may also let borrowers switch to making only interest payments but again, this is likely to mean paying more in total. What steps should people take to make sure they get the best mortgage deal? It's never a good idea to just go along with what your existing lender offers you, shop around! With the help of a mortgage broker, compare rates from hundreds of providers - it'll save you time and most likely money too. Also, plan ahead by beginning your search well in advance of your current deal finishing; at the moment, lenders are taking weeks to process applications so if you start looking early on, you might avoid having to move onto much higher standard variable rates that could cost you hundreds more while waiting for your new mortgage rate to begin. How much could a person save? While there's no specific answer to how much you can save, it really depends on your individual situation. In some cases, we've helped clients save hundreds of pounds every month. However, if you don't take action now, chances are good that you'll eventually end up paying way more than necessary.
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Rob Peters
Principal at Simple Fast Mortgage
The best way to reduce mortgage costs is to not have a mortgage and buy for cash. Unfortunately that option is only available to the vast minority so the rest of us will have to suck it up. PS. Don't pay your mortgage £999 fee upfront because if the property falls through you'll likely loose it. Instead add the £999 fee to the loan and reduce the borrowing amount by £999. Same result, but smarter thinking.
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Samuel Mather-Holgate
Independent Financial Adviser at Mather and Murray Financial
Reducing your mortgage costs can be done in three ways; get a better rate, extend your term, go interest only. The best way is to get a better rate. Seeing an independent broker will ensure you’ve got access to the whole of the market. They will tell you the leading rates and if you fit the criteria. The larger the equity in your home the better the rate you will get because the lender sees you as less of a risk. Consider putting in additional savings to decrease the loan to value. Careful not to leave yourself short. Having got the best rate available to you, if you are still struggling consider extending your term. The longer it takes you to pay off your mortgage will see your monthly payments come down. This does have a disproportionate effect on the total amount you pay over the term though, so consider this carefully. Finally, if you are in dire straits speak with your lender and see if you can switch to interest only. This will mean your monthly payments are just servicing the interest and you are making no inroads into the capital. This should only be done for a short period or if you have another way to pay off the loan at the end of the term.
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Riz Malik
Independent Financial Adviser at R3 Wealth
Some lenders are offering preferential rates on their Green product range. If you or your broker are researching deals make sure the energy efficiency of the property is factored in. This could save you money on your mortgage especially if the property was built within the last 10 years.
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Jamie Lennox
Director at Dimora Mortgages
The most significant savings that could be made is consulting an expert in the industry for advice. You don't necessarily want to go straight to your bank as they can only advise on their own product and there may be cheaper deals available elsewhere that an independent mortgage adviser can source for you. Not only could they potentially save you money, but also the time in shopping around. Products with a lower rate but more considerable arrangement fees aren't always cost-effective if you have a smaller mortgage debt and its important to look at the overall cost of any mortgage in question.
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Joshua Gerstler
Chartered Financial Planner at The Orchard Practice
"Don't just accept a new rate from your current lender, even though it is the easy option. More often than not, you get a better deal by switching to a new lender. You can either research this yourself, or use the services of a good Mortgage Adviser. You could make regular overpayments on your mortgage. Even just a small bit every month, can save you thousands over the term of your mortgage."
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Anil Mistry
Director and Mortgage Broker at RNR Mortgage Solutions
The best way a borrower can reduce their mortgage costs is to get professional advice from a mortgage broker. As Martin Lewis mentioned recently, "mortgage brokers are worth their weight in gold". There is no one size fits all, so a good broker will assess the borrower's circumstances and risk appetite, before recommending the correct way forward. Many brokers will have access to multiple lenders, some of which only do lending via a broker. Therefore, it is a non-brainer to speak to a mortgage broker as the first step.
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Alastair Hoyne
CEO, Finanze Capital at Finanze Capital
What can people do to reduce their mortgage costs? If People are looking to reduce their cost overall, they can: Opt to pay lender application fees upfront rather than add these to the loan which would then cause the fees to accrue interest, Apply for products that are cheapest overall (interest rate and fees included) not just those that have a low interest rate but may actually be more expensive when talking into account all the fees. What steps should people take to ensure they get the best mortgage deal? First and most important step is speak to a broker, make them aware you want the deal that is cheapest over the period you have chosen, eg if you want a 5 year fixed rate and know for certain you will refinance once the 5 year fixed period has ended ( which you should do as it will be more cost effective ) ask your broker to look for the cheapest mortgage over the 5 year fixed period as some brokers will take into account the cost over the entire term so taking into account the lender variable rate at that point which will not be relevant if you plan to refinance before getting on the variable rate. Hopefully your broker will already know to do this but its worth asking anyway!! How much could a person save You could save hundreds with the right mortgage, I had a client in June this year paying £800 pcm with Halifax as they were on the variable rate. By changing to a fixed rate their mortgage payments reduced to £550 pcm and although the lender had a arrangement fee of £1000 and other associated costs (val fee and sols fees of around £1000 total) the offered £995 cash back meaning their total remortgage costs were only £1000 so were paid off by the savings they were making on the monthly payments in 5 months with month 6 and every consecutive month them being £200 better off
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Mark Robinson
Managing Director at Albion Forest Mortgages
My top tip for finding the perfect mortgage, speak to a specialist. If you are self employed, speak to a self employed specialist, if you are a teacher, speak to a teacher specialist. If you are in the NHS, speak to an NHS mortgages specialist. Specialists in different mortgage areas will understand your problem and be able to provide the best solution, as they see the same problems day in and day out. They may even be able to save you money compared to a general broker that does a bit of everything due to their experienced knowledge in this area.
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David Robinson
Co-Founder at Wildcat Law
Shop around - When you finish a fixed term with a lender you should always look to see what options are available with other lenders. Loyalty does not usually pay when it comes to mortgage rates! Speak to an independent mortgage adviser and use the internet. Consider over payments - whilst it may seem counter-intuitive when people are finding it harder to pay bills, in the long run the best way to save money on your mortgage is to overpay if you have any surplus income or savings. If you are sitting on money in cash savings, aside from leaving a rainy day fund, you may want to seriously think about using them to overpay on your mortgage as chances are your mortgage interest rate is going to be higher than deposit savings rates going forward. Over the life of a mortgage this could save you thousands in interest.
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Graham Cox
Director at Bridging Hub
To reduce mortgage costs, see if you can remortgage to a longer term. There are lenders who'll allow a mortgage term to run to age 75 without retirement income being considered. If you have the finances, overpaying on your mortgage could allow you to reduce your monthly payments. But speak to your lender as most will keep your payments the same, meaning you'll pay the mortgage off earlier. Either way it's a win-win.
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Ricky Dosanjh
Director at Reeds Financial
- What can people do to reduce their mortgage costs? Speak to a broker. They understand the market, lenders criteria and ultimately match you with the right mortgage which could save you £000's of the bat. Going to your currently lender/bank might seem like the right thing to do but they will not review your financial position, instead just offer you a rate and assume your financial position is sound. If you're not on the maximum mortgage term, then you could stretch these - remember when rates fall again you can reduce your mortgage term on any subsequent remortgage. If no real options work you could consider Interest only in the short term, the debt balance will remain whilst on interest only, but this could help manage payments. Then again on any subsequent remortgage you can switch back to repayment as soon as you're able to ensure the mortgage debt is being cleared. - What steps should people take to make sure they get the best mortgage deal? See a broker. Bank will only advertise their deals, with a broker however they will be able to review the whole market (if they are whole of market) and factor in this like product fees, valuation fees etc. and work out the true overall cost for the period requested. - How much could a person save? There's no simple answer, everyone's circumstances are different but speaking to a broker could saves £000's over the lifespan of the mortgage.