Last week it was announced that by the end of 2015, mortgage payments for homeowners in Wales could increase by £180 a year.
The Centre for Economic and Business forecast that by the end of next year, average UK mortgage payments could increase by 1.25%. For homeowners in Wales, that could mean a possible £15 surplus each month. In response, Barclays’ Managing Director of Mortgages, Andy Gray, has said that “in the face of a rise in mortgage rates and in the cost of living, it is vital for homeowners to review their current situation.”
To own a home provides financial security and personal satisfaction, allowing you to convert your hard earned wages into bricks and mortar. This exciting experience should never be hindered by mortgage payments and in light of the proposed changes, we have rounded up our top five tips to make sure this potential price increase does not affect your everyday life.
1. Look at your current mortgage deal
Even if you are happy with your current mortgage payments, it is always a good idea to look around. Check your level of repayments and your interest rate; it may be that your lender has other options available that will benefit you greatly. By doing a bit of research, you can really determine what you can afford.
2. Analyse your payments
Money can be saved in many places. Review what you’re spending and try to determine what is a necessity, and what is not. For instance, look at your current phone contract, your television subscriptions and your broadband package – can you downgrade? There are so many other providers offering the same service for much less so you don’t even need to go without.
Carrying on from the previous point, review how much you’re spending on food and clothes. Drawing up a budget will show whether you are living within your means and will help you see where to make savings. One of the best ways to save money is to look at brand competitors for yourweekly shop. If you usually buy branded products, compare them to a supermarket alternative. For example, changing from Herbal Essences shampoo (£3.99) to the Boots alternative (£1.49), could save you £2.50 a bottle and on average £30 per year. If you can do this with most of the branded products in your shopping trolley, you will see a great difference in your weekly bill and annual finances.
4. Changing mortgages providers
If you are considering changing mortgage providers, try not to get caught out by only looking at low interest rates. Many banks and building societies, despite having low interest rates, have ‘extra charges’ that mount up. Changing your mortgage and opening a new account can be expensive, so ensure you have properly looked at the small print before signing a new contract. You don’t want to be caught out by low interest rates and end up paying a lot more.
5. Paying off a sum
Understandably, not all people will have the financial security to pay off a large sum of their mortgage easily and if you have any other pressing debts or payments, this option is not recommended. Always pay off more expensive debts before thinking about reducing your mortgage.
However, if this option is achievable, it can really benefit you in the long run. For example, paying off £5,000 on a £150,000 mortgage with a 5% interest rate and 25 years remaining will reduce the interest by £11,500 and the repayment term by 18 months. That is a significant saving, which will help especially with the forecast interest increase.
Whether you manage to change your weekly shopping trolley, reduce your phone bill or perhaps pay off a sum of your mortgage, really take time to analyse your financial situation.Saving now will benefit you in the future when the mortgage payment changes are put into place.
It is vital to remember that despite these changes, there is no experience that compares to owning your own home. So, use our tips as a guide and really enjoy being a homeowner.