Don't ignore your annual mortgage statement as being clued up about your borrowing makes it easier to switch to a better deal when the chance comes.
A mortgage is the biggest financial commitment many of us ever make.
So it makes sense to review it periodically to ensure and you know exactly how much you are borrowing, at what rate, and for how long.
The easiest way to do this is by checking your mortgage statement.
When will I receive a mortgage statement?
Lenders usually send out annual mortgage statements to borrowers in the first few weeks of the year – often at the end of January.
Rather than file this piece of paperwork away, take a closer look.
When did mortgage statements come into existence?
Mortgage statements became mandatory from 2004 when stricter mortgage regulation came in.
While some borrowers can check their mortgage accounts online, you should still receive a paper copy in the post once a year.
What information does a mortgage statement hold?
Your statement gives a total mortgage summary covering all the vital statistics.
This includes the size of your home loan, the payments you've made, the outstanding balance, the interest rate and the term.
The document will also set out whether you are have an interest-only or repayment mortgage, or a combination of the two.
If you have an interest-only deal, this piece of paperwork will provide a prominent reminder that the payments do not include the costs of a repayment vehicle – and a note to check you have a plan in place.
Where applicable, statements will also usually show any early repayment charge and redemption information, as well as insurance charges.
Late or missed mortgage payments will also show up.
Why check my mortgage statement?
Despite the mortgage being one of largest outgoings for many people, a lot of borrowers have no idea of the size of their mortgage – let alone the rate.
As a homeowner, it makes sense to review your borrowing from time to time, and one of the best moments to do this is as soon as your statement drops through your letterbox.
This will also help you to compare your mortgage against the raft of other deals currently available, and could result in some decent savings if you manage to find a more competitive alternative.
Even if this isn't the case, it will at least confirm that you are on the right deal for now.
Check carefully before remortgaging
If, having checked through your statement, you are thinking about remortgaging – moving to a new deal – you must remember to look at the total cost of any alternative: that means the interest rate plus fees.
You also need to give careful consideration as to whether to opt for a variable rate or a fix.
While rates have been frozen at rock bottom for several years now, they will only move in one direction – and that will be upwards.
If you think you might find it hard to pay your mortgage once rates do rise, you should look into a fixed-rate deal.
This will give you security and peace of mind of knowing what your monthly repayments will be.
Don't bury your head in the sand if you're having difficulties
With household budgets stretched to the limits, some borrowers may be having problems making their mortgage payments.
But if this is the case, the key is not to suffer in silence.
It's vital that you contact your lender as soon as you can – and essential that you do so before falling behind.
Your bank or building society will offer you as much as help as they can: this might involve claiming state benefits or getting financial advice.
Your lender may also agree to giving you support such as giving you a brief payment holiday, or lengthening the mortgage term.
If you fail to take action, the consequences could be far more serious.
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