How To Save Money On Your Mortgage

Two headline grabbing moves are happening in the property market. House prices are at their highest in two years and mortgage rates are falling.

Whether this is good news or not, depends on where you stand. Just as mortgages are getting more affordable, property prices are rising – so for first time buyers the news may not be great but if you own a home already – you might save thousands by looking for a better deal on your mortgage and moving it.

Q: Lucywiggles – says she wants to know ‘Everything’. So first of all what are the headlines about the mortgage and property price moves?

A: First of all, cheaper mortgages:

Rates have not been this low since early September 2022, according to analyst Moneyfacts. 

In July the Bank of England reduced its bank rate to 5pc after 14 consecutive rises, raising hopes that the move will kick off a downward cycle.

However, rates are still much higher than two years ago putting pressure on those who need to remortgage. 

NatWest has launched the cheapest five-year mortgage rate on the market. The loan is only available to those buying a home, not remortgaging.

Major lenders including Halifax, Virgin Money and Leeds Building Society all have new pricing available from last Friday

The better fixed deals are around 4.25% and the best discount deals are 4.6% so if you are paying more than that – do have a look at the list of deals on moneyfactscompare.

Prices Are Rising

With cheaper mortgage deals tempting would-be buyers back to the market, prices rose by 0.3 per cent in August, building on a gain of 0.9 per cent in July, according to Halifax. By its calculations, prices have risen in each of the past five months.

July saw an increase in the amount of mortgage borrowing by individuals, according to the latest Money and Credit report from the Bank of England. At £2.8 billion, this monthly figure is the highest total since November 2022.

Looking for a new deal - More than 1.5 million homeowners are due to reach the end of fixed-rate mortgage deals throughout 2024. So it could be worth checking around for better deals.

Interesting Looking Deals:

Always look out for the extra fees of the mortgage which add to the effective interest rate. APRC stands for the Annual Percentage Rate of Charge. It’s a percentage figure that shows you the total cost of your mortgage over the duration of the mortgage term.

The APRC is there to help you compare mortgages by giving you a single figure that considers all fees and interest rates across the whole mortgage. It is a very useful tool but also look at the APR if you are going to move mortgage before the end of the discount period.

Fixed:

Halifax

Rate: 4.25% fixed until 30 November 2026 before reverting to 8.49%

Initial period: 2 years

NatWest

Rate: 4.25% fixed until 31 December 2026 before reverting to 7.99%

Initial period: 2 years

Maximum loan-to-value: 60%

Variable

Progressive Building Society:  

Rate: 4.59% Discounted Variable (collared at 2.00%) for 2 years (3.90% disc) reverting to 8.49% 

Newbury Building Society

Rate 4.64% Discounted Variable for 3 years (2.11% disc) reverting to 6.75% 

First Time Buyers

Virgin Money:

Rate: 5.14% fixed until 1 December 2026 before reverting to 8.99%

Initial period: 2 years 

For a great guide to the best deals – look here at Moneyfacts here https://moneyfactscompare.co.uk/mortgages/

Q: electrill – Advice for when buying with a partner! Do you split mortgage/bills the same ratio as the deposit

Unmarried property owners in England and Wales have slightly different legal rights regarding the ownership of the property, compared with those who are married.

When buying a property with someone else, there are two forms of joint ownership to choose from: Joint Tenants and Tenants in Common.

If you choose to own the property as Joint Tenants, the property is considered to be owned jointly, so in the event of the death of one owner, their share in the property will automatically be transferred to the surviving owner.

If both people would prefer to keep their interest in the property completely separate, it may be better to purchase the property as Tenants in Common. This will mean that if one person dies the shares in the property are considered to be separate. But if you are buying like this I think it’s going to be hard to sell your half – since you would have to find someone who is willing to own half a house and live with your ex-partner or friend. So even under this scheme you are tied to each other.

Cohabitation Agreements

For many couples it is worth entering into a Cohabitation Agreement before buying a house. This written agreement would outline the ‘intentions of ownership’ and each person’s understanding of what would happen in the event that the relationship came to an end.

Rights to property if you are married or have kids

Things are different if you're married or if you've have children together. When you're married you're automatically entitled to a share of your partner's assets. This means you have a legal right over the property, even if you're not the legal owner.

Q: Jess_alton – What do you need to consider when weighing up buying a ‘project’; vs something ‘done?

VALUE: Dilapidated properties tend to be cheaper. With new homes, you’re paying for the time and money someone else has put into it. But set a budget. You can add a lot of value if you can add a bedroom for instance – putting a galley kitchen in the living room and turning the separate kitchen into an extra bedroom.

YOUR WAY: The big thing is you are going to be able to buold it your way and build with the long-term in mind. A developer might not insutlate for instance as they don’t have to pay the bills – so you can buld things to be long-term sustainable.

KNOW WHAT YOU ARE DOING: If you can’t do it yourself – try to get a builder on board before you buy and take them with you to get a quote

---

QUICK TIP - HOW TO PAY YOUR MORTGAGE OF EARLY

1. Overpay your mortgage using savings

2. Remortgage to a lower interest rate

3. The next time you remortgage, shorten the term

4. Use an offset mortgage

5. Pay mortgage fees up front