MARTIN Lewis has shared a step how those with six months left on their mortgage could save thousands.
The Money Saving Expert said 1.5 million cheap fixes end this year and those people “need to start prepping for it right now”.
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Speaking on his ITV show tonight, he shared three tips on how to prepare for paying more for your mortgage and suggested bringing out a mortgage calculator.
Lewis‘ key point was that people with six months left on their fix should talk to their lender about other mortgage products they offer.
Under the new mortgage charter, current lenders should offer borrowers other deals with little or no fees up to six months before their fix ends.
But, he says borrowers should check they can get out of the new deal penalty-free and switch to another provider in case interest rates drop.
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In effect, sticking with the same lender becomes an insurance policy for the borrower, as long as they can get out of it.
Lewis says: “You could say: ‘I’m going to get this deal, as long as I can get out of it if things go cheaper, I’ve locked this rate in now in case things go worse’.”
This could save people thousands as they are able to avoid paying fees and get the best mortgage rate possible.
Unfortunately, he says those coming off a fixed rate are likely going to have to pay more than they were before due to rates.
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Lewis suggests lenders do two other things to help themselves prepare for paying the higher fees.
Firstly, he tells people to prepare for the fact they are going to pay more by factoring a 5 per cent interest rate payment on their household budget.
“I’d be getting on a mortgage calculator right now… you need to prepare your budget to do exactly that [pay more].”
Secondly, if people have extra cash and a cheap mortgage, Lewis says they should set the cash aside to pay off their future mortgage.
Lewis suggests putting the cash into a savings account – which has a higher rate of interest than a mortgage rate currently – and then pay off the mortgage with that money in the future.
On tonight’s show, Lewis also revealed tips for renters and how they can claim cash back if they live in substandard housing.
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