Cut £20,000 off your mortgage. Have you got 10 Minutes Spare?

A 10-minute call could save you up to £20,000 in mortgage costs; since the beginning of 2021, fixed-rate deals have been going down in price.

• On the 24th of October, Natwest’s fixed rate with 15% deposit over a period of five years was 6.39%.
• Based on a £250,000 mortgage with a duration of 25 years, the monthly payment amount is estimated at £1,671.
• As of the 2nd of February, the rate is 4.58%, which will result in payments of £1,401 a month.
• And it would save £30,500 of interest over a ten-year period.

At the start of the year, fixed-rate mortgages were much pricier than they are now. Since then, costs have been decreasing steadily.

Home buyers looking to secure a mortgage could save considerable money by approaching their lender for a more affordable fixed interest rate.

The Bank of England has raised interest rates again, yet the cost of fixed-rate mortgages has decreased significantly since the beginning of this year.

This detail institutions don’t have to tell you is that even if you applied when rates were highest at 6.5 percent, back in October.

Making a call to your bank could dramatically reduce future monthly payments and help save thousands of pounds in interest for numerous people, according to experts. Even if the application process was started recently, last month for instance, you may still benefit from this.

On 24th October, NatWest had a five-year fixed rate of 6.39 per cent for those with a 15 percent deposit, which worked out to £1,671 per month on the basis of a 25-year loan of £250,000.

By February 2, the new borrowing rate stood at 4.58 per cent, resulting in a monthly payment of £1,401. This shift would mean a borrower saves £16,200 in interest over five years.

Adrian Anderson, the director of Anderson Harris Mortgage Brokers, comments that over the past 3 months there has been a reduction in fixed rates for new deals, and anticipates this trend to carry on.

If you have a mortgage offer letter from the previous four months and haven’t utilized it, contact your bank. It could allow you to switch to a more affordable alternative which is comparable in value.

Mr Anderson states he was able to save a customer £330 every month through shifting their 5.24 percent five-year fixed rate with HSBC, booked on the 10th of November and costing them £1,965 per month.

He waited for it to be finalised, then headed back to the bank and requested a switch to 4.36 per cent, which was the rate being provided to new customers. By making this change he could save £19,800 in interest between now and 2028.

Find out what rate your bank is offering to new customers for the same deal, and if it will be possible to switch without disrupting your mortgage offer, Mr Anderson suggests.

He stresses that it’s not certain due to the varied regulations among banks. However, he believes making a call can help one avoid paying a higher rate than necessary.

HSBC and First Direct recently both introduced five-year deals below the 4 per cent mark, with 3.99 per cent being the rate. Lloyds Bank and Virgin Money are now following suit by offering the same rate for a thirty-three year period.

Moneyfacts have reported that the average five-year fix is currently 5.08 per cent while, interestingly, ten-year deals are currently slightly lower at 5.06 per cent.

Fixes that hold for a decade are a particular type of product. Data from UK Finance shows that just 4 per cent of loans taken out in November were for an extended period of more than five years; 66 pc had a five-year plan, and 22 per cent had opted for a two-year term.

Experts have cautioned against signing ten-year contracts too quickly, even if the rates are more appealing than shorter-term arrangements. They emphasise that this type of agreement carries less flexibility in the long run.

When seeking a mortgage, it is important to think about your situation and how long you intend to remain in your property. Andrew Montlake of broker Coreco highlights this.

It’s possible you could move your mortgage to another property, however, this will be determined by your lender. I’d suggest not to make a decision just on the interest rates alone.

David Hollingworth of mortgage broker L&C believes that lenders will continue to introduce products below 4 per cent, increasing the variety of options available over the coming weeks.

The ‘swap rate’ – the cost for banks to borrow money to lend to homeowners – is currently more expensive in the short-term, allowing banks to offer lower rates on longer-term products, according to Mr Hollingworth.