Tom Barrett, Debt and Benefits Expert at caba, comments on what the falling mortgage rates mean for your finances:
“Whether your mortgage is coming up for renewal soon or you have already selected a new deal, now is possibly a good time to review and potentially switch to a better rate.
However, make sure to read the small print and check that a deal isn’t too good to be true. It’s essential to look beyond just the interest rate. Fees can add up quickly, so make sure to factor in any arrangement fees, valuation costs, and early repayment charges when comparing deals. A low rate might not always be the cheapest option once fees are included.
If you’re considering switching lenders, then you should review your contract terms, including early repayment charges and exit fees. You should also check the flexibility of the mortgage, such as the ability to make overpayments or switch deals without hefty penalties.
There are also steps you can take to make your mortgage more affordable. If you still have some time left on a lower fixed-rate deal, you might be able to pay more now to save later. You can also extend the term of your mortgage. While the typical mortgage term is 25 years, you can switch to 30 or even 40-year terms. You may also be able to consider moving to an interest-only mortgage on a temporary basis. This can keep your monthly payments affordable, although you won’t be paying off the debt accrued when purchasing your house.
If you are struggling to meet your mortgage payments, we would encourage you to speak to your mortgage lender, and to seek free independent debt advice. Prior to renewing your mortgage deal or making any changes to your mortgage we would advise reaching out to an independent financial adviser, as they can help you navigate the latest deals and find one that suits your financial situation.”
