As new year’s resolutions go, being proactive with your mortgage may seem pretty boring. But it could save you money in 2018, especially if you are coming to the end of your fixed term mortgage.
It’s no secret that mortgages approvals are decreasing year-on-year, and becoming harder to get, especially when you circumstances and income aren’t cut and dried. These figure have resulted in lenders offering competitive rates and mortgage deals. Fixed rate mortgages and products with high loan-to-value ratios are becoming increasingly popular, and in light of the number of deals available, home owners have many options to consider in terms of cutting their doctors mortgage costs in the year ahead.
Overpay a little, save a lot
When rates are low, it pays to put a little extra towards you mortgage every month if you can afford to, and your lender permits you to. By overpaying your mortgage now, you will ultimately have a lower outstanding balance if rate rise in future, allowing you to get a better deal when you remortgage.
If you can afford to pay off a bigger chunk of your monthly payments and can commit, reducing the term of your doctors mortgage could save your thousands in the long term. For example, if you have a mortgage of £300,000 with 20 years remaining (interest rate of 3.5%), overpaying by £200 each month means you be mortgage free two years and ten months earlier – saving just over £18,000 on interest.
Look at your remortgaging options
Mortgage rates remain cheap at a range of loan to values, even if they are a little higher than the historic low we saw last year. This means that for some, it could make sense to remortgage earlier than planned, to take advantage of low rates and the protection offered by longer term fixes.
Depending on your current deal, remortgaging now could save you money in the long run – even factoring in an early repayment charge in some cases.
Please note that this won’t be the correct choice for every doctor, so it is best to speak to an independent doctors mortgage specialist before you make this decision.
Fix for longer
The popularity of a fixed mortgage has risen significantly due to a combination of increasing competition in the mortgage marketplace, and continued economic uncertainty. Two year doctors mortgage deals remain the most common, but they require buyers to be proacyive in switching their mortgage before it expires to continually get the best deal.
More and more lenders have begun to compete in the 5 year market in recent years, as buyers look to lock in their rates for longer – a trend spurred on by Brexit negotiations and a potential Bank of England base rate rise.
Get organised
If your fixed term doctors mortgage is expiring later this year, it’s never to early to start setting up a new deal. Pave the way for a new mortgage deal by getting your credit score in tip top condition, and having early conversations with an independent mortgage adviser who specialises in doctors mortgages and understand your unique pay structure and who have access to specialist lenders.
When mortgage lenders make a mortgage offer, it is often valid for up to 6 months – so if your current mortgage ends this summer, why not shop around now, and give yourself more time to choose the right mortgage product for you.
Looking for mortgage investment advice for doctors?
Whether you are a first-time buyer or looking to remortgage, our team of doctors’ mortgage experts are only a ohone call away and can offer impartial advice on your doctors mortgage. Give the Doctors Mortgages Online team a call on 01656 332600.
Note: Mortgage data taken from Which? Money Compare. Correct as of 5 January 2018.
Your home may be repossessed if you don’t keep up repayments on your mortgage.
