Saving money on your mortgage

When people take out a mortgage they look for the best rates and deals available at the time. Most opt for a special deal from their chosen lender, I.e. cash back, discount rate or the most popular fixed rate mortgage.

They are then happy to sit back knowing they have secured a great deal, and with a fixed rate mortgage, secure in the fact that if interest rates go up they will still be paying the same amount. Most fixed rate deals are for between 2 to 5 years (there our longer ones) and are usually fixed at a rate below the current Bank of England base rate at the time for a set time period.

Once the fixed rate mortgage period is over you will then revert to the lenders standard variable rate (SVR), which will be higher than the current Bank of England base rate. When the above happens many borrowers suffer from a payment shock as their payments will be significantly higher.

You should take steps to ensure you only pay this rate for a short period of time, or no time at all. You need to plan your mortgage well in advance, even thinking of the next mortgage deal you will look for before you choose your current one.

You should ensure the mortgage deal you are looking at does not have any extended tie-ins or penalties when your deal is over. This will allow you to change to another deal without any financial penalties.

When you take out your mortgage deal ensure you make a note of when it finishes, and give your self several months to find a suitable replacement, that way you should never pay the lenders standard variable rate again.

Saving money on your mortgage is all about planning for the future. Of course, no-one can predict the future, but planning for it will always help.