7 Managing your mortgage
Another way to reduce the cost of borrowing is by reviewing and changing your mortgage if you are a homeowner.
Your mortgage and your pension are usually the two biggest and most important financial products you will have to manage in your life. So you should pay maximum attention to both, with the aim of making sure your mortgage is repaid before you retire and your pension savings offer you a comfortable retirement income.
Switching between products and lenders can produce huge savings.
There are two particular events which should trigger a review of your mortgage:
- If you find yourself on the lender’s ‘standard variable rate’ (SVR) mortgage you could see if there’s a better rate available. There usually is. So look to switch – ideally before the SVR kicks in. And be prepared to move to a new lender too if this is required to get the best deal.
- If you are on a fixed-rate deal and the rate was fixed some years ago it might make sense to switch to a new deal with a lower rate of interest. There may be a charge for switching from your existing deal - something that is usual with fixed-rate mortgages - but you can weigh up if it’s still worth paying this and switching. The calculations around this are a little fiddly but are available. If you do need help a mortgage adviser would be able to talk you through them.
Do take the time for a regular review to see whether you can get a better deal right up to the last year or so of the mortgage term.
Next there’s a short quiz to check what you have learned from this session.