Posted on 23 January 2014
A new year and a new fitness regime go hand in hand and while most of the fitness programmes will make your pocket lighter and your body fitter, our New Year's plan of action for a healthy mortgage should add some extra cash to your budget releasing those endorphins - but with less sweat!
And thankfully it requires nowhere near the willpower of the 5/2 diet or the 30 day shred. Here are John Charcol's main pointers for a financially healthy 2014.
Be aware - if you are paying a Standard Variable Rate, you are probably already paying too much. With interest rates starting from below 2% it's all about winter freeze - fix your rates now as 5 years fixed rates are starting from 2.88% at 60% loan to value (LTV) and competition has increased even at the top tier of 90 and 95% LTV. And with today’s news of the fall in unemployment rates to just 7.1% it’s important to act quickly!
And talking about LTV, when was the last time you had your property valued? It's worth asking some estate agents to come around for a cup of coffee and a valuation or just checking how the local market is performing on property websites such as Zoopla. If your property has increased in value and your mortgage has reduced even slightly, you are on to a winner. If you bought your property with a loan for 85% of the value two years ago, even with a modest 3% increase per annum, your LTV should have reduced to just 79%. If your property has increased in value by a fairly modest 5% increase per annum, you can potentially move to a 75% LTV value mortgage – and would enjoy far more competitive rates.
Be brave - Take action now. With Christmas and New Year gone and (almost) forgotten, all presents unwrapped and any unwanted ones finding their way on to eBay (or is that just me?), it's time to stop procrastinating and wipe off those extra pounds from your mortgage payments. In the same way that you get the best results with a personal trainer, using a mortgage consultant to design a tailor made plan for you could provide you with the best and most cost effective solution. Talk to a broker service like John Charcol to make sure you’re getting the best from the market. Remember – if you talk to your bank the range of mortgages available could be much smaller.
Be clear – Take time to understand what you would like to achieve.. If you are planning to move home in the next 2 years, a 5-year plan may penalise you with high early redemption charges. If you choose to have an interest only mortgage (yes, they still exist but are on the verge of extinction), then think carefully whether you have a suitable capital repayment plan. And, even if you think you've got it all covered, it's worth checking with a properly qualified financial adviser, (that's their job after all), and our friends at Towergate Financial will be there to help. With offices based all over the country, you can even pop in and see them face to face.
And once your mortgage is under control, you can turn your attention back to those New Year’s fitness resolutions... Now where did I put my gym kit?
The blog postings on this site solely reflect the personal views of the authors and do not necessarily represent the views, positions, strategies or opinions of John Charcol. All comments are made in good faith, and John Charcol will not accept liability for them.