The New Year is a good time to review your household finances and look at ways you might be able to save money in 2019.
Your mortgage is likely to be your biggest monthly outgoing, so it’s a great place to start if you’re looking to cut costs. Here’s our rundown of some of the mortgage resolutions you might want to consider making.
Make sure you’re not paying more than you need to
If you haven’t checked your mortgage for a while, find out what rate you’re currently on, and whether there are any early repayment charges if you move to a different deal.
If there aren’t any, see if you can reduce the rate you’re currently paying by remortgaging to a more competitive deal. There are plenty to choose from and many come with incentives such as cashback, or help with valuation and legal costs.
Always remember to look at the overall cost of any deal you’re considering including any arrangement fees, rather than focusing on the headline rate alone, and seek advice if you’re not sure which mortgage to choose.
Consider a fixed rate mortgage if you’re worried about rising rates
The Bank of England raised the base rate from 0.50% to 0.75% in August last year, and there are predictions that further rate increases could be on the cards, perhaps at some point in 2019.
If you’re on a variable rate mortgage, make sure you’re prepared for higher rates. If you’re concerned you wouldn’t be able to cover potentially steeper monthly payments, you may want to consider going for a longer-term fixed rate deal. These can provide valuable peace of mind that your payments will stay the same if rates do go up.
Overpay your mortgage if possible
Overpaying your mortgage by even a little bit each month can dramatically reduce the amount of interest you’ll pay back overall and with interest rates so low, it’s the ideal time to do it. It could also shorten your mortgage term, so you’ll be debt-free sooner.
Many lenders will allow you to pay back up to 10% of your mortgage each year without penalty but check with yours to see if it has any restrictions on overpayments.
Review any buy-to-let mortgages
If you’re a landlord, review your buy to let mortgages so you can be certain you’re not paying more than you need to. Keeping outgoings to a minimum is likely to be a priority in 2019, particularly given the gradual phasing down of mortgage interest tax relief. From April 2019, it will only be possible to claim tax relief on 25% of mortgage interest payments, down from 50% in this tax year.
Start saving for a deposit
Hoping to get on the property ladder in 2019? Then you can’t start saving for a deposit soon enough. Take advantage of government saving schemes which boost your contributions. For example, if you save into either a Help to Buy ISA or a Lifetime ISA, the government will top up any payments you make by 25%. You can only use the government bonus from one of these accounts to buy a property. Check out our guide to government schemes for first-time buyers for more on how these accounts work.
What are your mortgage resolutions?