For many, a mortgage can provide the pathway to getting onto the property ladder and buying their dream home. Most mortgages run for 25 years however the term can be shorter or longer, as the Money Advice Service explains.
If they all switched to a competitive deal, it would equate to nearly £2billion saving nationwide, compare the market said.
Speaking to Express.co.uk this week, Mark Gordon, director of mortgages at comparethemarket.com, said: “If you are on a lender’s standard variable rate you are very likely to be overpaying on your mortgage.
“According to our research, homeowners on an SVR could be paying up to £2,000 a year more compared to those on an average two-year fixed-rate mortgage deal.
“As well as saving money each month, borrowers who remortgage onto a competitive, fixed-rate product have the certainty of fixed monthly repayments, which could make it easier to manage monthly outgoings in a challenging economic environment.
“Whilst first-time buyers face more limited options as some lenders restrict eligibility, the remortgage market remains competitive for existing homeowners, with plenty of attractively priced deals to choose from. It pays to shop around online.”
With the new year just around the corner, many may well be undergoing a review of their finances.
Be it to save for something special or simply to get financially fit, Hayley Millhouse, MD of the financial advice platform OpenMoney, has shared some top tips for financial resolutions in 2021.
Review your incomings and outgoings
“It’s a good idea to review the past few months expenditure and create a monthly budget including mortgage/rent, bills, groceries, transport costs, spending money and savings,” Ms Millhouse said.
“Understanding where every penny goes can help identify where you’re potentially overspending.
“Review your bills and subscriptions to see if you can cut costs – perhaps by cancelling a streaming service you don’t use anymore, or switching energy providers.
“Money management apps such as OpenMoney’s can help you to understand where you’re spending your money without the hard work.”
Start to save a cash buffer
Building up savings in case of emergency was another suggestion put forward by Ms Millhouse.
She said: “A cash buffer is a cushion to fall back on should you lose your job or have been put on a scheme programme to what we have seen with the Government’s furlough scheme.
“As a rough guide, I would recommend a cash buffer of three months outgoings kept in accessible savings, but for many people this may not be realistic given current circumstances – save what you can.
“You may have already had a cash buffer, and have had to dip into it during the pandemic, now is the time to replenish it. Draw up a new list of all income and outgoings and start afresh in 2021.”
“Protecting yourself from financial difficulties by investing in insurance is key,” commented Ms Millhouse.
“Income protection insurance for example will provide you with a tax-free income if you’re unable to work because of an accident or illness. You choose when cover kicks in – after, say, three or six months.
“This will depend on any savings and cover from your employer. This can be particularly valuable insurance for the self-employed who do not have any sick pay or insurance through work.
“Alternatively, critical illness insurance will pay a lump sum if you are diagnosed with one of the illnesses covered by the policy, but these policies are typically more expensive.
“A broker or financial planner can help you work out the right cover for your particular situation.”
Talk about financial concerns
“Money can all too often be a taboo subject with family and friends, but talking about it openly and honestly and discussing concerns that may have arisen during the pandemic will help you gain a fresh financial perspective and support for the future.
“A unified effort to boost your finances is often the best way forward. If and when the time comes, you may want to seek professional advice to help achieve your financial goals too.”