Interest rates have remained steady at 5.25% since August, and it may take time before they start to decrease.
For the 1.6 million UK homeowners with fixed-rate deals expiring by the end of December 2024, remortgaging could lead to higher costs.
Additionally, over 1.4 million people on tracker and variable rates are already facing increased monthly payments and are hoping for a decline in rates.
Here are some expert tips to help you save money on your mortgage:
- Consider Downsizing
While downsizing may not be ideal for growing families or those in smaller flats, older homeowners whose children have moved out might find this option beneficial. Selling your current home for a smaller property could lower your mortgage balance or eliminate it altogether.
“With higher interest rates, seeking independent advice can help homeowners explore options like downsizing,” says Rachel Springall from Moneyfacts.
- Extend Your Mortgage Term
While the typical mortgage term is 25 years, longer terms of 30 or even 40 years are now available. Extending your mortgage term can reduce monthly payments, but it may lead to paying significantly more in interest over time.
“Regularly reassess your mortgage term as your financial situation changes,” advises Mortgage expert, David Hollingworth.
- Generate Extra Income from Your Property
Explore options such as listing your home on short-term rental sites like Airbnb, renting out your parking space, or taking in a lodger or student.
- Make Overpayments if Possible
If you’re currently benefiting from a low fixed-rate mortgage, consider making overpayments to reduce your principal.
- Switch to an Interest-Only Mortgage
If you have a repayment mortgage, switching to an interest-only option could help lower your monthly payments. However, this should be a temporary measure, as you’ll still need to pay off the principal at the end of your mortgage term.
“Your eligibility for this option will depend on your income and the equity you hold in your home,” advises Richard Dana.
By implementing these strategies, homeowners can better manage their mortgage costs amid rising interest rates.
Further reading
Purchases – Oakwood Property Solicitors
WHAT TO DO NEXT
To make a start on the next step in your property journey, get in touch today to book a consultation with a member of our team. Call us on 0113 218 5727 to find out how we can help you.
