Mortgage: This is how Britons could save £326 per month in payments

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Mortgage applications can often be a complex and lengthy process, involving evaluation of finances in particular. The process is likely to be further complicated by the tumultuous financial situation – a result of the COVID-19 crisis. The property market took a hit a few months ago, as lockdown was announced across the country.

As a result, the ability to move home or progress on a mortgage deal was all but frozen, leaving many in limbo.

And some struggled to keep up with mortgage payments, so were permitted to take a payment holiday to assist them. 

However, there may be ongoing difficulties for those who have been placed on furlough.

The furlough scheme has seen many lenders introduce new criteria when it comes to mortgage applications.

Many lenders have decided to base a mortgage assessment on a person’s lowered salary, and some are choosing not to lend to those on furlough at present.

There are, however, some tips for those who are dealing with mortgages at this time, with the online mortgage broker Trussle offering assistance.

Britons should first check if they are headed for their mortgage provider’s Standard Variable Rate.

This is because for a typical borrower, the difference between a market-lending deal and the average Standard Variable Rate (SVR) is around £4,500 in extra interest each year.

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Saving this money could be life changing for many households looking to reduce their costs.

Britons are therefore encouraged to review their mortgage using a remortgage calculator to see the kind of savings they could possibly make.

In a similar sense, remortgaging is often an option which can assist people in saving a significant amount.

On average, homeowners can save £326 a month by choosing to remortgage, and while doing so if furloughed is tricky, it is not impossible. 

Affordability checks are important to bear in mind, and so speaking to a mortgage broker about individual circumstances could prove helpful. 

Easing the financial pressure of a mortgage may also be achieved through looking into product transfers.

Data from Trussle revealed those who go through a product transfer can save on average £326.31 per month.

Eligibility for product transfers can fortunately be checked through existing lenders, and so this process should not be too complicated. 

Finally, switching to an interest only deal could be a suitable option for those looking to reevaluate their finances.

Interest only deals involve adjusting mortgage payments so only interest is paid, meaning there is money saved in the long run.

Much like other options available, the extra cash can go towards a savings account or other essential expenses.

But it is once again important that homeowners check with a broker to ensure this is the correct decision for them.

Miles Robinson, Head of Mortgages at Trussle, commented on the situation many Britons are facing.

He said: “There are many uncertainties homeowners and house hunts are facing post-lockdown. 

“The end of the furlough scheme is fast approaching and the deadline on mortgage payment holidays will also be in sight sooner than we think.

“Although there are challenges during this tricky time, there are ways to prepare for financial bumps in the road.”

Mortgage availability is expected to improve in the coming months.

It is hoped that as the financial effects of COVID-19 begin to wear off, more products will return to the market, making it easier for borrowers to have choice. 

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