How can I cut the cost of my mortgage?

Whether you’ve saved during the pandemic, or your income has shrunk, here are some ways to reduce the cost of your mortgage:

● SHOP FOR A BETTER DEAL. Visit comparison sites, such as Moneysupermarket and Moneyfacts, now that rates are at record lows. Some five-year deals are just 1.19%, according to financial analyst Defaqto. Even if you have only a few years to go until the end of your mortgage, you could still save by switching. ‘Before you do, check for early repayment charges or exit fees,’ says Brian Murphy, head of lending at Mortgage Advice Bureau. Nisha Vaidya, mortgage expert at money.co.uk, adds: ‘If you’ve taken a mortgage payment holiday, you will notice an increase in repayments once these start again, accounting for the interest built up. Remortgaging would help bring these down. But it may be difficult, if you’re viewed as under financial strain. Lenders will decide case by case.’

● OVERPAY. Overpaying can wipe out your debt much more quickly, and potentially save thousands of pounds in interest charges, but read the small print before you remortgage as there can be penalties, too.

● OFFSET YOUR SAVINGS. An offset mortgage is a useful way to cut the cost of your mortgage repayments, as the amount you have in savings is deducted from your mortgage balance, and you only pay interest on the difference.

● GO GREEN. If you have an energy-efficient home or are planning green home improvements, check out green mortgage deals. Lenders include Barclays, Natwest and RBS. You may benefit from cheaper rates, cashback or funding towards improvements. ‘The stipulations vary, but typically they are offered to owners of homes that fall within, or have been improved to, a certain EPC band,’ says Nisha. Your home’s Energy Performance Certificate (EPC) states how energy efficient it is, with ratings ranging from A, the highest, to G, the lowest.