However, in the current climate where most people are budgeting and seeking financial advice to manage their finances more efficiently, they are not actually keeping an eye on their mortgage and ensuring that they are on the best possible deal available. Those who have not checked their deal within the last twelve months may be able to find a better deal online.
An estimated 3 million people do not know what type of mortgage they are on and therefore will probably not be on the best deal available to them. Understanding what type of deal you are on is very important so that you can take advantage of the services that accompany it. Flexible rates often mean you can overpay without incurring penalty charges, this is just one example of additional services that you can make use of.
However, if you are on a fixed rate mortgage deal then some lenders will only allow you to pay back a percentage of the mortgage each year (usually around 10%) and paying the mortgage back earlier may result in Early Repayment Charges (ERC’s).
Overpaying on your mortgage repayments can also have benefits when it comes to looking for a new mortgage deal. This is because you will have more equity in the property, this means you are in a better position to find more competitive deals. Many people simply cannot afford to pay more than is required whereas some people want to save spare money for other things. However, if you feel you can afford to pay a little extra then you should do so.
For those who have wanted to overpay in the past but couldn’t afford to may now be able to due to the cut of Bank of England base rate which is now at a record 0.5%. If you are on a variable rate and your mortgage repayments drop then why not consider paying the same amount as before. A mortgage is one of the longest financial commitments you will have in your life and as such reducing the amount of time it takes to pay back is surely a good idea.
If you are in any doubt then seek advice from a whole of market mortgage broker to get the best mortgage deals for you. Consult them if you are looking for first time buyer mortgages as well.
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About the Author:
Bob Brightside is an experienced author in the finance field having worked in the industry for many years.
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