Costs Involved in RemortgagingExpenses incurred in debt rescheduling
It' always a good idea to talk to your current creditor before you get a new loan to see if it offers you a better business. They may find that this will be less expensive than the best alternate offering you can find, as you can prevent charges or fines for switching over.
Interest contracts are concluded for a certain term, e.g. two or five years. Once you have maintained your mortgages repayment, your loan-to-value (see 3 below) may also have increased since the inception of the mortgages, which means that better offers are available. So rather than letting your mortgage tick over on the SVR, ask your lender what other installment it offers.
Creditors compute how much interest they will be charging on the basis of Loan-to-Value (LTV), i.e. the amount they have charged you against the value of the real estate. As the LTV is lower, the interest is lower. As a rule, an LTV is priced at 5% threshold, with the best transactions reserved for those with the largest deposit.
Price differences between limits can be significant - for example, the gap between a 5% and 10% payment can be up to 2%. So, if you are near a certain point, it might be wise to try paying out a flat fee for your mortgages so that you get a better interest and have less to spend, both once a month and in total.
You say, for example, you owed 200,000 on a 25-year old hypothec with an interest of 3.5%. You are currently being refunded approximately 1,000 per annum per year. By overpaying by 50 each month through £8.211 you would be saving over the lifetime of the mortgage in interest alone. A lot of home loans allow you to pay up to 10% of the amount of the borrower per year without penalties, but it is a good idea to check what the regulations are for your business.
You can use our mortgages repayments calculator to quickly compute your refunds.