For the majority of us, our mortgage repayments are our single biggest monthly outgoing. Doctors: How to save on your mortgage!
1. Don’t slip onto a Standard Variable Rate (SVR)
If you’ve bought into a fixed rate mortgage two, three or five years ago and didn’t remortgage when your deal came to and end, you’ll have automatically slipped onto your lenders ‘standard variable rate’ which is likely to be much higher than the fixed rate you were on. Your monthly payments would have automatically increased as a result.
If your loan-to-value (LTV) has improved since you took out your last mortgage, which is highly likely if you have kept up your mortgage payments, you can access far better deals than you would have been able to previously.
So, don’t sit soundly on a standard variable rate. Ask your medical mortgage provider what other rates they are offering.
2. Get multiple quotes
If you’ve only gone to one lender, then you are limiting your chances of getting a competitive mortgage. You can get quotes from several different lenders by contacting numerous lenders individually, or speaking to a medical mortgage broker who can do all the groundwork for you.
A medical mortgage broker provides specialist independent advice for medical professionals. They can also access mortgage deals from lenders that don’t have a presence on the high street.
3. Improve your loan-to-value
Mortgage lenders calculate how much interest they will charge based on your loan-to-value (LTV) ratio. The lower your LTV, the lower the rate of interest that you pay. Typically calculated in thresholds of 5%, the best deals are always reserved for those with big deposits. The optimum LTV is usually 60%, but if you are closer to a 5% threshold at anytime it could be worth paying off a lump sum to get yourself the better rate.
4. Overpay when interest rates are low
Requiring a lump sum outlay, overpaying doesn’t sound very attractive, but could save you thousands in the long term. Paying off the total amount you owe faster means that you don’t pay as much interest as the total repayment is reached sooner.
Many mortgages permit you to pay a maximum of 10% of the loan amount off without a financial penalty, but you need to check your individual terms to be sure. If your savings account gives you a better interest rate than your mortgage, then it is better to save the money there, rather than overpay your mortgage.
5. Get professional advice
There is a lot of money to be saved by getting professional medical mortgage advice from the minute you decide to buy a property or remortgage. Your personal circumstances are unique to you, and you need to find a mortgage suited to your career path and lifestyle goals both in the short term and the longer term.