Many people are looking to cut the cost of their mortgage repayments, especially in the midst of a recession. For homeowners, mortgage repayments will be the biggest debt, and also the largest monthly expense, so it makes sense to try and save money anywhere you can. So, just what can homeowners do to trim some cash off their mortgage payments? Take a look at some of the best top tips to spend less on your mortgage every month, and see how much you can save!
Extra Mortgage Payments
If you’re looking to cut the cost of your mortgage, as well as the length of the debt, then adding an extra payment each year is a great way to start. For example, instead of 12 monthly payments over the course of a year, make it 13. Not only will this reduce the size of your mortgage and keep you in the bank’s good books, but as this is an extra payment outside of the agreed contract, you wont have to pay interest on the amount.
Smaller, Bi-weekly Payments
Another great way to trim the cost of your mortgage is to make bi-weekly payments to your mortgage lender. Instead of paying a monthly sum, put half of the mortgage cash in a savings account when you get your pay cheque. This means that over the course of a year, you will have made 26 half payments, totalling up to 13 full mortgage payments.
Not only will you be left with extra cash during the month, as well as at the end of the year, but you’ll also be reducing the length of your mortgage contract. If this sounds too complicated to do on your own, there are companies that can help you to set up this system. However, always clear it with your bank before you go ahead with the bi-weekly payments.
Payment Protection Insurance (PPI)
If you paid a deposit on your mortgage that was less than 20 per cent of the total sum, then there’s a good chance that you would have had to take out payment protection insurance. PPI is a safety net for people who lose their jobs and are unable to pay their mortgage, and they’re always a good investment for people with cheap mortgages. By paying the premium, it covers your mortgage payments for a long enough period until you can get another job, or start repaying your mortgage.
Payment Protection Insurance can be a pricy premium, and many people don’t actually know that they’re paying for the protection of their mortgage. If you are looking for ways to reduce the cost of your mortgage, then cancelling your payment protection insurance is an easy way to save some extra cash every month. Furthermore, you don’t have to purchase it with your bank – you can find better deals online through price comparison websites if you decide that you want to keep it.
Always make sure you research your options before cancelling your payment protection insurance however, as many lenders require that you have some form of mortgage insurance.