Mortgage rates on both tracker and fixed rate mortgage deals have dropped further this year, making it an excellent time for contractors to review their existing mortgage deals.
Mortgage switching is not as common as switching other regular outgoings like energy providers and household insurance. However, switching your mortgage deal, particularly in times like these, can be a fantastic opportunity to save money, or release the cash from your property to put to good use.
Let’s use an example.
John currently has a mortgage of £350,000 and he’s on a standard variable rate paying 3% interest which makes his mortgage payments £875 a month or £31,844 over the next 3 years.
He decides that he’d like to save some money on his mortgage by making the most of the current low rates. His broker finds him a 3 year fixed deal at 1.79% with a total of £1,800 in fees, including solicitor’s fees. As he has plenty of savings he decides that he’ll pay the fees up front.
On this deal his monthly repayment drops to £521 per month and the total amount he pays in interest and fees in the 3 year period is £20,546.
That’s a saving of £3,766 a year adding up to £11,298 over 3 years. Not a bad saving for a few hours of effort.
To save time and hassle when working as a contractor, it makes sense to work with a broker who specialises in arranging mortgages for contractors.