Homeowners are facing a mortgage nightmare with soaring interest rates set to add hundreds of pounds to monthly bills. Around 1.6 million fixed-rate deals are due to end this year, meaning many borrowers will be forced to remortgage onto much pricier deals.

If your fixed rate is ending soon, you could be in for a shock. The average two-year fixed rate mortgage is currently 5.93%, while a five-year fix sits at 5.5% – a far cry from the 1-2% rates offered just a couple of years ago.

This means that someone with a £200,000 mortgage on a 2% rate could see their monthly repayments jump from £848 to a painful £1,280 when they remortgage – that’s an extra £432 every month!

While experts hope that interest rates will eventually fall, they’re likely to stay high for the foreseeable future.

But don’t panic! There are ways to fight back against rising mortgage costs and keep your monthly payments under control. Inews featured six tips to help you save thousands:

1. Ditch the Standard Variable Rate Rip-Off

If your fixed rate deal has already ended and you haven’t remortgaged, you’re probably on your lender’s standard variable rate (SVR) – and this is bad news for your bank balance!

SVRs are often the most expensive rates on the market, and with the average SVR currently at a whopping 8.18%, you could be paying hundreds of pounds extra every month.

For example, on a £200,000 mortgage, an SVR of 8.18% would cost you £1,568 per month, compared to £1,228 on a five-year fixed rate at 5.5%. That’s a potential saving of £340 every month just by switching!

2. Remortgage Now – Before It’s Too Late!

Remortgaging is when you switch your current mortgage to a new deal, either with your existing lender or a different one. And if you’re coming to the end of your fixed rate deal, it’s the best way to secure a lower interest rate and reduce your monthly payments.

Even if you’re tied into a fixed rate deal, it might be worth checking if you can remortgage early. Some lenders will allow you to do this, although you might have to pay an early repayment charge. However, the savings you make on a lower interest rate could outweigh any charges.

3. Boost Your Loan-to-Value (LTV)

Lenders offer better interest rates to borrowers with a lower LTV – this is the amount you borrow compared to the value of your property.

There are two ways to improve your LTV:

• Increase your property value: Carrying out home improvements, such as a new kitchen or extension, can add value to your home and boost your LTV.
• Reduce your mortgage debt: Using savings or inheritance to make a lump sum repayment on your mortgage will instantly reduce your LTV and unlock cheaper rates.

4. Overpay and Clear Your Mortgage Faster

If you can afford it, overpaying on your mortgage is a great way to chip away at your debt and save a significant amount of interest over the long term.

Most lenders will allow you to overpay up to 10% of your outstanding mortgage balance each year without penalty. Even small overpayments can make a difference.

For example, overpaying by just £200 a month on a £200,000 mortgage could help you repay your mortgage six years earlier and save you nearly £48,000 in interest payments!

5. Offset Your Savings Against Your Mortgage

An offset mortgage links your savings to your mortgage. This means the interest you earn on your savings is offset against your mortgage interest, reducing your monthly payments.

For example, if you have £40,000 in savings and a £200,000 mortgage, offsetting could reduce your mortgage term by almost six years or lower your monthly payments by £183.

6. Think Carefully Before Extending Your Term

Extending your mortgage term means spreading your payments over a longer period. While this can reduce your monthly payments in the short term, you’ll end up paying more interest overall.

For example, extending a £200,000 mortgage from a 25-year term to a 35-year term could save you £154 per month, but you’ll pay thousands of pounds more in interest over the lifetime of the mortgage.

Get Expert Help

The mortgage market can be tricky, especially in the current climate. A mortgage broker can help you compare deals, find the best rates, and guide you through the remortgaging process.