Keeping track of your mortgage can help you keep up with repayments, save money in fees, get you the best deal and run it smoothly. Here is how to manage your mortgage account, according to www.money.co.uk.
Think carefully before securing other debts against your home. You may have to pay an early repayment charge to your existing lender if you remortgage and other fees may be payable. Your home may be repossessed if you do not keep up repayments on your mortgage.
What happens after you get your mortgage?
Repay your mortgage
Once you have bought a property, you will be responsible for paying the mortgage on time and looking after the property.
Lenders charge a fee if you miss a repayment, and it could also damage your credit record and mean you have to pay more interest.
Set up a direct debit for your monthly repayments so they will be taken automatically from your account, and you will not miss any payments.
If you can choose a repayment date just after you are paid, there is less chance you will spend the money.
Manage your mortgage online
You can set up an online account to keep track of your:
You can usually sign into your online account to update your contact details or change the bank account your mortgage direct debit is taken from.
Alternatively, you can keep your account up to date or check your balance by contacting your lender by phone, post or in a branch.
Can you switch mortgages?
Yes, this is called remortgaging, and getting a better deal could save you money.
Make sure the fees are less than the amount you save by getting a lower interest rate. Here is how to check if a remortgage will save you money.
Look out for interest rate rises because they cause your repayments to increase.
Introductory rate mortgages
If you have an introductory rate like a fixed or tracker mortgage, when it ends you will be moved to a variable rate that is usually more expensive.
Check for a better deal two or three months before then so you have enough time to switch.
Variable rate mortgages
If you have a variable mortgage, the rate could go up at any time, so be prepared to switch if it becomes more expensive.
Build up an emergency fund to help you make your repayments if the interest increases unexpectedly.
Should you overpay on your mortgage?
You can overpay on your mortgage by:
Paying more than the amount due each month
Paying off a lump sum when you are able to
This could cut the amount of interest on your mortgage and get it paid off quicker, but some lenders charge you for overpayments.
Changes to your mortgage
You should inform your mortgage provider if anything changes so they can keep their records up to date or offer you help if you need it. Contact your lender if you need to:
Add a joint borrower
Change your name
Change the term of your mortgage
Update your contact details
Changes to the property
If you make any changes to your home that affect its value, you should let your lender know. This includes:
Adding an extension
Building a conservatory
Converting a garage, attic or basement into a bedroom
If you decide to rent out all or part of the property, you need to tell your lender because you need their permission first.
Some mortgages’ terms and conditions will not let you do this, and some lenders will need you to change to a buy to let mortgage, especially if you will be moving out of the property.
Changes to your circumstances
Let your lender know when your personal circumstances change if it could affect your ability to pay your mortgage; for example:
You get divorced or break up with your joint mortgage holder
If one of the mortgage holders dies
You lose your job or go self employed
If you will struggle to make a payment
If you miss a mortgage payment, you may:
Have to pay a fee
Damage your credit record
Pay more interest
Take longer to pay off your mortgage
Lose your home in extreme circumstances
However, if you contact your lender before the payment is due, they may be able to help you. Here is what to do if you think you will miss a repayment.
How to pay off your mortgage
Your repayments will be calculated to clear your balance and all interest by the end of the mortgage’s term:
Keep making your repayments until then
Your lender will close your account
You will then fully own your home
If you want to pay it off early or switch it to another lender, you will need a redemption statement for your current mortgage.
Contact your lender to ask for a redemption statement, which will confirm the exact amount you need to pay to clear your mortgage balance, including fees like early repayment charges.
You can then pay this amount by bank transfer or cheque. If you are remortgaging, your new mortgage will pay off your old one instead.
How do joint mortgages work?
You could get a larger mortgage if you buy a home with someone else. Here is everything you need to know about joint mortgages whether you want to buy with your partner, another person or a group.
What is a joint mortgage?
You can buy a property with one or more other people by getting a mortgage in the names of both or all of you.
Everyone named on the mortgage is responsible for making repayments. You can decide between you how you share the equity in the property. This is the percentage of it that you own, which increases as you pay off more of the mortgage.
How much do joint mortgages cost?
They come with the same costs as standard mortgages, including interest and mortgage fees.
However, if you can save a higher deposit between you, this should give you a better choice of mortgages, so you could choose one with a lower interest rate than if you bought a property alone.