Making the most of a mortgage can pay off; MONEY, MONEY, MONEY Julie-Ann Haines, customer director at Principality Building Society, talks about the importance of knowing your mortgage.
Despite this, our recent survey of mortgage holders in England and Wales indicated that almost half don't know the interest rate of their loan.
The survey, which quizzed 1,000 people, revealed that, while 87% of mortgage customers can state the amount they repay each month, 48% aren't able to recall their interest rate with absolute certainty. This is somewhat surprising, because 61% of those surveyed said that interest rate was the primary reason they chose a particular mortgage in the first place.
But it's vital that you understand the finer details of your mortgage plan, because any changes to your product can have an impact on your monthly repayments.
With Bank of England interest rates expected to rise in the not too distant future as well as the inevitable financial impact of Christmas on its way, it's important to take the time to understand your mortgage and assess whether it's still relevant to your needs. Interest rates are a fundamental feature of any mortgage, and knowing these is an important part of the monthly budgeting exercise.
Thankfully, mortgage customers are more confident when it came to other basic facts about their product, with 95% able to name the provider with which their product is held, 74% knowing how much is owed on their mortgage and 76% aware of the date at which the mortgage will be repaid.
But, surprisingly, our survey also indicated that more than one in five mortgage customers never change their mortgage. This means that you may not be getting the best deal as your circumstances change.
Despite what some may think, a mortgage isn't always a lifetime commitment that shouldn't be questioned or changed - you should regularly review it over the years to ensure that you are getting the deal that is in your best interests.
The reality is that mortgage rates are constantly in flux, and the mortgage which was right for you when you first took out your loan may not be the best one for you in years to come.
Luckily, re-mortgaging can be easy to do and a hugely powerful tool in reducing monthly payments.
Of course, changing financial services providers may be a signifi-cant stride out of the comfort zone, but our recent feedback from customers shows that the process has been more straightforward and hassle free. The reality is that remortgaging a property isn't as daunting as many believe.
The key to responsible mortgage management is to be proactive. Take time to familiarise yourself with the key facts of your mortgage and arm yourself with the knowledge to shop around for the most suitable mortgage for your circumstances. The most important thing to remember is to carefully plan your finances so you can afford your mortgage now and in the future. When you're making your monthly budget, don't just assume that your mortgage repayment is going to cost the same as the previous month, particularly if you are on a variable mortgage. Make sure you find out how much you are going to repay.
This is as simple as digging out your mortgage approval letter, giving your bank or building society a call or popping into your local branch. With interest rates still at record lows you may even want to repay more of your mortgage now to help manage repayments when rates rise.
The few minutes of effort could give you the peace of mind of knowing you're on the right mortgage for you and your circumstances.
To view the results of Principality's 'Your House' survey visit www.principality.co.uk/mortgagestoday.
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|Publication:||Western Mail (Cardiff, Wales)|
|Date:||Oct 4, 2014|
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