YOU could save thousands of pounds in mortgage repayments by simply comparing and switching to a cheaper lender.
While a 0.5 or one percentage point difference in an interest rate might sound like small change, it’s anything but.
Most people borrow hundreds of thousands of pounds on a mortgage – which means a slight difference in the interest rate can make a big difference to your monthly repayments.
We did some of the maths for you, and below you can use our calculator to see how a different rate can affect you.
How a lower mortgage rate can save you money
The average two-year fixed rate for is currently 5.84%, according to data firm Moneyfacts.
Now, if you were paying off £200,000 and spread the mortgage over 25 years, you would pay £1,269 each month for the initial two-year period.
That’s the average rate, and at the time of writing there are better deals to be found.
One of the lowest rates for someone with a loan-to-value (LTV) of 60%, according to Mortgage Advice Bureau (MAB), is 4.49% with Danske Bank.
If you managed to take out this rate, on the same amount borrowed, your monthly bill would be £1,111 instead.
That’s £158 you’re saving a month, and at the end of the two-year period you’d save £3,792.
The amount you could save is significant for first-time buyers too, and it could change the affordability picture.
If you had a 10% deposit, the average five-year fixed rate you could get is 6.12%, according to Moneyfacts.
If you were borrowing £270,000 on this mortgage over 30 years you’d pay £1,639 a month.
MAB said one of the best rates at this fixed length, for a 10% deposit, was 4.83%.
On this rate you’d pay £1,422 a month instead – saving you £217 a month compared to the average.
Over the five-year fixed term you’d be £10,560 better off.
To see what rates you could be eligible for, speak to a mortgage broker to understand your options.
How much can YOU save?
Use our quick calculator below to see how much your monthly repayments could drop on a cheaper rate.
Watch out for the ‘fee trap’
It’s still important to remember that a low rate isn’t everything.
Some lenders couple these deals with sky-high fees, and if it’s added to the cost of your mortgage it can make the overall cost of borrowing more expensive.
That’s especially important to remember if you’ve little to wipe off.
Don’t go it alone
While you can do the research yourself, often the advice of an independent mortgage broker can be easier.
They have access to “broker-only” deals you won’t find on the high street and can do the heavy lifting for you.
While brokers usually charge a fee too, as a Sun reader you can get mortgage advice for free.
We’ve partnered with MAB, one of the largest brokers in the country, to provide free mortgage advice for those who book their appointment using the link below.
If you go directly, you’ll usually pay a fee.
