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As the year draws to a close, it's the perfect time to review your finances and make sure everything's in order. While you're thinking about New Year's resolutions and fresh starts, there's something that deserves your attention right now: your mortgage.
Many homeowners unknowingly make simple mortgage mistakes that can cost them thousands of pounds over time. The good news? Most of these are surprisingly easy to fix. Here are three common mortgage mistakes worth sorting out before January arrives.
This is one of the most expensive mistakes homeowners make, and it's incredibly common. If your fixed-rate mortgage ended this year and you didn't refinance, you are likely on your lender's Standard Variable Rate (SVR). These rates are typically much higher than the deals available when you shop around.
The difference can be significant. For example, on a £200,000 mortgage, switching from a 7% SVR to a 5% fixed rate could save you around £3,000 in the first year alone.
Before the year ends, check when your current deal expires or whether you're already on an SVR. Start exploring your remortgage options now, as it typically takes 4-8 weeks to complete the switch. Getting the ball rolling before January means you could start the new year with lower monthly payments.
When you first took out your mortgage, you probably chose a term that seemed reasonable at the time. But circumstances change, and what made sense five or ten years ago might not be the best option now.
If you're overpaying comfortably each month, you might benefit from officially shortening your mortgage term. This could save you thousands in interest over the life of your mortgage. If money is tight, extending your term can lower your monthly payments. This gives you more room in your budget.
Take some time this December to look at your mortgage statement. How many years do you have left?How much are you paying each month? Would adjusting your term help you meet your financial goals?
Talking to a mortgage adviser can help you understand your options. They can also tell you if making changes now is a good idea for you.
Many mortgage deals allow you to overpay by up to 10% of your outstanding balance each year without penalty. Yet surprisingly few people take advantage of this opportunity.
Even small overpayments can make a real difference. Adding an extra £100 each month to a £200,000 mortgage at 5% can save you over £20,000 in interest. It can also help you pay off your mortgage almost four years sooner.
The key word here is "allowance." Most lenders reset this 10% limit annually, so if you haven't used this year's allowance, you'll lose it. Before January, check how much you can overpay and whether you can afford to make one last payment before the year ends.
If paying extra regularly feels too strict, remember that most lenders allow lump sum payments. You can make these payments whenever it works for you, as long as you stay within the yearly limit.
Your mortgage is likely your biggest financial commitment, so it deserves a proper end-of-year review. These three checks won't take long, but they could save you significant money and stress in the year ahead.
Not sure where to start or what your best options are? That's exactly what we're here for!
At Friends Capital, we help homeowners in the UK understand their mortgage options. We guide them to make choices that fit their needs. Get in touch before the New Year, and let's make sure you're set up for a financially healthier 2026.