Taking on a mortgage is a really huge step, mishandled it could ruin you financially. However, these 3 thoughts to save money on your mortgage are intended to guide you through an exciting process! My guess is that you have the rightmove app, you spot a ‘for sale’ sign a mile away and generally cannot wait to cook in your OWN kitchen.
Check your affordability
Not very glamourous I know, but, what is the point in searching homes you just cannot afford right now? There are plenty of online calculators out there online but this Affordability Calculator is our favourite because it does not collect any personal data in order to give you reliable figures for your searches. Play around with your numbers, think about bonuses or side hustle income. Use this calculator to understand your finances in even more depth, therefore helping you to save money on your Mortgage. Could paying off your loans or credit cards put you in a better place to afford what you are looking for. You don’t really need to use a calculator for that one. IT WILL.
Consider your risk level
Fixed rate or Variable rate. Repayment or Interest only. These are things you will need to consider and talk through with your partner if you are buying together or just your mortgage advisor if you are going it alone. It is so important to understand what these terms mean and give them meaning to save money on your mortgage. Using a calculator like this Amortisation Calculator will give you figures that you can use within your budget and planning. For example, an increase of just 1% in an interest rate translates to approximately £100 more a month. Do your sums and be prepared to make adjustments to your budget, no one knows where interest rates are going to go (up or down) but if you have already considered how you would cope with an increase it won’t have the same detrimental effect on you or your family. Potentially, if rates were to fall you could consider overpaying – if allowed with your mortgage – in order to beat any future rises as well as lesson your debt burden.
How much Money do you actually need?
You’ve saved a decent deposit, you have an idea of your family size and what you are hoping to achieve within the next 5 – 10 years. You’ve settled on the idea of a 3 bed semi with a back garden, driveway and a garage. Not to mention it has to be within a great school catchment area. Whilst I love a 5 year plan, not everyone does. Not everyone needs this goal. This ‘dream’ doesn’t suit everyone. And that is totally ok. My point is, if you work in town, still enjoy eating out, have a smaller commute by being there and just love being around the town you don’t need to give that up. Buying what you can afford and something that fits with your lifestyle now is perfectly fine.
Buying too much house can mean that you are a slave to the cleaning and maintenance they require. Even if you don’t take on this work yourself it can be costly to hire people in to do the work.