I heard interest rates are to rise this year and I’m worried about the increase costs now and in the years ahead. How can I cut my mortgage costs?

 

This year, many of us will be thinking about ways to cut our regular outgoings. And for many, there’s no larger monthly bill than our mortgage repayment.

So how can we cut our mortgage costs?

Talk to a Broker and see if you can switch to a better rate. Try to shorten your mortgage, don’t lengthen it. On average, it takes us more than 30 years to repay our mortgages. Many of us extend our mortgages when we remortgage, from the 23 years remaining back up to 25, for example. While this can make the monthly cost a bit more manageable, you pay for it in the long term.

Instead, you should think about reducing your mortgage whenever you remortgage, so that you pay it off more quickly and cheaply. It may not even cost any more each month and you’ll still save thousands.

 

Another Option is….

 

Rather than reducing the mortgage length, you could take advantage of any flexibility your deal offers you to overpay without penalty. Many lenders offer this facility. Just paying an extra €500 off in 2022 could save you thousands over the remainder of your mortgage.

 

Review and cancel pointless insurances

Check that you’re not paying for insurances you don’t need. Many homeowners have indiscriminately been sold life insurance to protect mortgage payments, but if you have no family to fend for if you were to die young, you’re probably paying unnecessary premiums.

 

Prioritise your mortgage

If you’re having financial difficulties, it makes sense to prioritise your mortgage repayments, along with secured loans, gas and electricity, hire purchase and taxes. These come before other debts because you can either be imprisoned for them or you can lose your home more easily than with other debts. Losing your home is not a good way to cut your mortgage costs!

 

If you can’t afford your mortgage even after making cutbacks elsewhere, you should immediately contact your lender. It’s very clear from former debtors and debt advisers that most of the time it works out well for you to communicate openly and honestly with your creditors, and as quickly as possible. Tell your lender that you’re seeking debt advice from Mabs or a PIP – and do so straight away.

 

The final word

A mortgage is not just for the next 12 months. Try not to get too carried away with guessing what you think will happen over the next 12 or 24 months, and plan for the longer term. Get good local advice. This will give you greater financial security. 

 

This article aims to give information, not advice. Always do your own research and/or seek out advice from a regulated financial broker, before acting on anything contained in this article.
Warning: Your home or property may be repossessed if you do not keep up repayments on your mortgage or any loan secured on it.

Leave a Comment

Your email address will not be published. Required fields are marked *