If my 100% mortgage scheme is coming to an end, should I use my savings to reduce my mortgage loan amount?

Q: We took out a 100% mortgage in April 2008 (just before the products were withdrawn from the market) and I belive the property value has retained its purchase price due to its location – which is around £378k. We have now moved from the fixed to tracker r

A:

I think yours is a very interesting question, and there are a large number of people who are in a similar position to yourself. I have to start by making it clear to you that although I am a fully qualified mortgage adviser, I’m not authorised to give you any advice about where to invest your savings as I am not qualified to do so. My advice would be as follows:- 1) If you can achieve a better return on your savings than the 2.50% interest rate that you are being charged for your mortgage, then you shouldn’t use your savings to reduce your mortgage balance. You should shop around and/or speak to your Independent Financial Adviser to make sure that you are receiving the best possible rate of return for your savings. 2) If possible you should always try to keep the equivalent of 3 months of your net income as savings to fall back on to cover any emergencies. You should also make sure that you have protected your income against accident, sickness and redundancy. 3) You should make the most of your current low mortgage payments by putting aside the difference between what you had been paying originally for your mortgage, and what you are paying now. You could use these savings to add to your savings pot. 4) To protect your mortgage payments against interest rate rises, under the circumstances that you were unable to remortgage onto a fixed rate due to having insufficient equity, another option we could look at is a general insurance product that you could use to protect your mortgage payments against interest rate rises over the next 2 years. By paying taking out one of these policies you could ensure that your mortgage payments would not increase above 3.5% for 2 years. I would be happy to give you a quotation for one of the above policies, and to have a chat about your situation in some further detail. Call me on my direct line, 020 75194909 or email me at caroline.burke@largemortgageloans.com

These questions are for information purposes only and do not contain all the details you need to choose a mortgage, ask one of our advisers for a personalised key facts illustration

Return to the Questions archive

Our insights


We are the UK’s leading specialist in delivering innovative and bespoke financing solutions to global clients.

Reviews


Specialists in creating innovative and bespoke funding solutions.

Your home or property may be repossessed if you do not keep up repayments on a mortgage or any other debt secured on it. Changes in the exchange rate may increase the sterling equivalent of your debt. You may have to pay an early repayment charge to your existing lender if you remortgage. Think carefully before securing any other debts against your home.  

largemortgageloans.com is a trading name of Largemortgageloans.com Ltd, Aegon House, Ground Floor Suite, 13 Lanark Square, London, E14 9QD authorised and regulated by the Financial Conduct Authority (FCA). Our FCA registration number is 302228 and can be viewed by visiting the FCA website: www.fca.org.uk.  The FCA does not regulate tax advice or some aspects of commercial, buy to let, overseas mortgages, bridging finance, finance and asset lending.  

Largemortgageloans.com Limited is registered with the Guernsey Financial Services Commission, reference number: 2269418, as a Non-Regulated Financial Services Business.  

Largemortgageloans.com Ltd Registered in England and Wales No: 5070990 Registered Address: As above. The guidance and advice contained within the website are subject to the UK regulatory regime and is primarily targeted at UK customers. Calls may be recorded for training and monitoring.