Paying off your mortgage early is an enticing idea. For most homeowners, becoming mortgage-free is the ultimate milestone – and they dream of how to spend the extra cash once their debt is gone.

If you’ve built up a healthy savings pot, it might be tempting to clear your mortgage early and live the rest of your life debt-free. 

But is it always the right move? What should you consider before making that decision? And how do you actually go about it?

Mouthy Money answers those questions – and more – below.

The benefits of paying off your mortgage early

There are plenty of upsides to clearing your mortgage ahead of schedule.

For starters, there’s the peace of mind that comes with knowing your home is fully yours, no matter what life throws at you. If you lose your job or fall ill, you’ll always have a roof over your head.

It also frees up a load of cash that you can put towards other things, such as home improvements, retirement savings or even that holiday you’ve always dreamed of.

Depending on how much you have left on your loan, it could also save you thousands of pounds in interest over the long-term.

For example, let’s say you have a £250,000 mortgage at a 4.5% interest rate over 25 years. That means your monthly repayments would be around £1,390.

If you increase your repayments by just £100 a month (to £1,490) you’d save £21,871 in interest and clear your loan two years and 10 months early.

If you increase your repayments by £200 a month, you’d save £38,458 in interest and shave five years and one month off your mortgage.

Some people prefer to make lump-sum payments, rather than increase their monthly outgoings. But the same principles apply.

Let’s say you received a £10,000 bonus or inheritance and put that money towards the same £250,000 mortgage. In this case, you’d save £19,584 in interest and pay off your loan one year and nine months early.

Great, so I should just go ahead and pay off my loan early?

Not quite. While there are clear advantages to paying off your mortgage, it may not be the best option for everyone.

First, check that your lender allows overpayments and if there are any charges or penalties for doing so.

If you’re on a tracker mortgage linked to Bank of England Base Rate, you can usually overpay as much as you want without charges – but check with your lender first.

However, if you’re locked into a fixed-rate deal, you’ll typically be limited to overpaying 10% of your outstanding balance per year.

So, if you owe £250,000, you can pay off up to £25,000. But if you go over that, you’ll probably have to pay an early repayment charge (ERC) – and they’re not cheap.

On a five-year fixed rate, typically ERCs are 5% of your outstanding balance in year one, 4% in year two, 3% in year three all the way down to 1% in the final year.

So, if you owe £250,000, that’s a whopping £12,500 in year one, £10,000 in year two, tapering down to £2,500 in the final year of your five-year fixed rate.

Therefore, you need to do the sums to work out whether it’s worth your while repaying your loan early.

I don’t have to pay ERCs – should I press ahead?

Even if you don’t have to pay ERCs and have the cash, you need to ask yourself a few additional questions before diving in.

Firstly, do you have enough savings to cover emergencies, such as losing your job or unexpected car or home repairs?

Experts recommend that you have at least three to six months’ worth of living expenses in an easy-access account to cover unexpected expenses. You should prioritise this safety net before overpaying on your mortgage.

Next, ask yourself: am I carrying high-interest debt such as personal loans or credit cards?

If the answer is yes, it usually makes sense to clear those first, as they tend to charge higher rates of interest than your mortgage.

After that, you need to ask yourself whether your money could be working harder elsewhere.

Compare the rate on your mortgage with the rate available on high-interest savings accounts or investing.

As a rule of thumb, if your mortgage rate is higher than the interest you can earn in a savings account, overpaying your mortgage may make sense.

Let’s return to the example above, where you have a £250,000 mortgage on 4.5% over 25 years, and you want to pay £10,000 off your loan in a lump-sum.

For the sake of this example, let’s also assume that you’re a basic rate taxpayer and the best savings account on the market pays 5%.

Paying an extra £10,000 off your mortgage would save you £19,450 in interest and shave one year and nine months off your term.

However, you would still be £3,080 worse off paying £10,000 off your loan than if you’d put it in a 5% savings account, even though your mortgage would be cleared in just 23 years and 3 months.

That’s because over that time your savings would be worth £31,360, which would be more than enough to repay the remaining £28,280 left on your mortgage balance – and leaving you £3,080 spare.

If you’re unsure whether you’d be better off repaying your mortgage or saving your money instead, moneysavingexpert.com has a handy calculator you can use.

Investing in the stock market could also offer better long-term gains – typically 5-7% a year after inflation – but it carries risk, and returns aren’t guaranteed.

Whatever your choice, it’s worth speaking with a mortgage broker or financial adviser to get tailored advice. 

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I’m going ahead with it. How do I do that?

Most lenders make overpayments pretty straightforward. You can either ask them to increase your monthly direct debit or make one-off payments via your online account or over the phone.

If you prefer a more flexible approach, making lump-sum payments when you get a bonus or extra income might work better for you.

Are there any clever ways I can build up my cash savings to pay off my mortgage early?

There are ways you can increase your monthly repayments without feeling the squeeze.

For example, every time you get a pay rise, put the extra cash straight towards your mortgage. You won’t miss the money – after all, you never had it to begin with.

But as outlined above, you need to ask yourself whether you’d be better saving that money or paying down other debts instead.

There are also apps to help you overpay your mortgage. Accelerate My Mortgage and Sprive, for example, combine cashback and Artificial Intelligence to give you the tools to pay off your mortgage earlier.

Disclaimer: Mouthy Money has not tried either of these apps, so make sure you do your homework before you sign up to anything.

Alternatively, banks like Monzo and Starling offer ‘round-up’ features. If you buy a coffee for £2.60, the app rounds it up to £3 and squirrels away the 40p difference in a separate savings pot. Over time, these small amounts can add up and be used towards overpayments.

The best part is you barely notice it happening – but your mortgage balance certainly will.

Mortgage-free life

Paying off your mortgage early can feel like an incredible achievement, but it’s not a one-size-fits-all decision.

Make sure you’ve got an emergency fund, cleared any expensive debts and considered your long-term goals. Then speak to a mortgage broker to help weigh up your options.

And if you do decide to go for it, congratulations – you’re one step closer to financial freedom.

Photo by RDNE Stock project

The post Home ownership freedom: should you try paying off your mortgage early? appeared first on Mouthy Money.

Picture the scene: you’ve found the perfect home, secured your mortgage offer and it looks like everything is on-track to move in before the end of March, as you’d hoped.

Then things grind to a halt. The property chain you’re in is gummed up, paperwork has gone missing and your solicitor seems to have vanished.

It suddenly dawns on you – you won’t complete before 31 March. You’re frustrated. You’re angry.

Why? Because it means that you’ll miss the looming Stamp Duty deadline and potentially have to pay thousands more in tax.

If that sounds familiar, you’re not alone. 

74,000 buyers, including 25,000 first-time buyers (FTB), could miss the deadline, facing a collective tax hit of up to £142 million, according to property directory Rightmove.

That’s because, from 1 April, a temporary increase in the nil-rate band – the threshold below which no stamp duty is paid – will expire after nearly two years.

From 1 April, FTBs will start paying tax from £300,000, instead of £425,000. Anything between £300,000 and £500,000 will be taxed at 5%.

That means a FTB purchasing a home at the national average (£268,087, according to the Land Registry) will continue to pay nothing. 

However, a FTB in London purchasing a £450,000 property will see their tax bill jump from £1,250 to £7,500.

It’s not just FTBs who will be hit. 

From 1 April, home movers will start paying tax from £125,000, rather than £250,000, as it is now. They’ll then pay 2% on the portion between £125,001 and £250,000, and 5% on amounts up to £925,000.

If you’re a buyer, missing that deadline will be incredibly frustrating. But is it a disaster? Maybe not. 

Granted, you’ll have to find the extra tax up front, which may mean having to raid your savings or, in some cases, delay your purchase.

But if interest rates fall over the next 12 months, as expected, you may be no worse off over the long run.

The current consensus is that the Bank of England will cut interest rates from 4.5% now to around 4% by the end of the year. Some experts believe they could fall to as low as 3.5%. That’s one percentage point less than they are now.

While mortgage rates aren’t directly tied to the base rate (they’re influenced by swap rates and global markets), a lower base rate often leads to cheaper mortgages over time.

And if mortgage rates fall enough, you could actually save more over time than you lose in upfront tax.

Mortgage numbers crunched

To show you what I mean, let’s imagine two scenarios: buying now with lower tax or waiting a year and paying higher tax, but securing a mortgage rate that’s one percentage point lower. Both properties are in England. 

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Scenario one: buy before the stamp duty deadline

• Purchase price: £268,087 (the current national average).
• Mortgage: five year-fixed rate at 90% loan-to-value (LTV), 5.4% interest rate (the current average at this tier). 30-year mortgage term.
• Stamp duty: £904.35.
• Five-year total cost (stamp duty plus five years’ worth of mortgage payments): £82,195.47.

Scenario two: wait a year

• Purchase price: £276,129 (same property but assumes prices have grown 3% in that year).
• Mortgage: 90% LTV at 5.4% for the year you spend in your old property, then 4.4% for the next four in your new property. 30-year mortgage term.
• Stamp duty: £3,404.
• Five-year total cost: £80,796.69.

Despite paying more stamp duty, you’d be nearly £1,399 better off over five years if you’d waited because lower mortgage rates have cancelled out the extra tax.

Now let’s try another example, but this time we’ll assume that you’re a home mover purchasing a £450,000 property.

Scenario one: buy before stamp duty deadline

• Purchase price: £450,000
• Mortgage: five year-fixed rate at 90% loan-to-value (LTV), 5.4% interest rate. 30-year mortgage term.
• Stamp duty: £10,000
• Five-year total cost (including stamp duty and mortgage payments): £146,451.98

Scenario two: wait a year

• Purchase price: £463,500 (same property, but assumes prices have grown 3% in that year)
• Mortgage: 90% LTV at 5.4% for the year you spend in your old property, then 4.4% for the next four in your new property. 30-year mortgage term.
• Stamp duty: £113,175 (£3,175 more)
• Five-year total cost (stamp duty and five years’ mortgage repayments): £142,407.63

In this example, you’d be more than £4,044 better off over five years, despite your higher tax bill, thanks to the lower mortgage rate you have secured on your new property.

In fact, your new mortgage rate would only need to be 0.66 percentage points lower than your current one to cancel out the effect of higher taxes.  

Clearly, the examples above are just illustrations, and they rely on certain assumptions about property values, house price growth and mortgage rates.

We can’t be sure, for example, that house prices will only increase 3% this year, although that’s what Halifax, the nation’s biggest mortgage lender, believes. 

Similarly, we can’t be sure mortgage rates will fall by one percentage point over the next year – or at all. 

I’ve also ignored FTBs in my calculations. There are two reasons for this: firstly, they will continue to pay nothing for purchases under £300,000, which should cover FTBs in most of the country outside London. 

And second, I would need to make some additional assumptions about rents for the second scenario. This would make like-for-like comparisons difficult.

But what I hope I have shown is that while it would be (incredibly) frustrating to miss the stamp duty deadline, it isn’t necessarily the end of the world. 

That’s not to say that you shouldn’t try to complete by 31 March if you can, as your savings will be even greater over the five years, especially if mortgage rates fall.

Therefore, you should make sure you are flexible, have all your paperwork to hand and are willing to badger your lender, broker and solicitor if necessary.

But if it’s looking increasingly likely that you’ll miss the deadline, don’t stress about it. Over the long-term, the impact may be far smaller than it seems today.

Photo credits: Pexels

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British savers should be earning up to twice the interest they currently are on their savings, Mouthy Money can reveal.

In a fresh blow to savers, damning new evidence uncovers how banks are routinely underpaying customers, despite interest rates recently hitting a 15-year high.

Data compiled for Mouthy Money by Moneyfactscompare.co.uk show how banks are paying up to half the interest they were in November 2008 – the last time Bank of England Base Rate was at its current level of 4.5%.

The revelation will heap further pressure on banks, which have been accused of profiting from the recent spate of interest rate hikes at their customers’ expense.

‘Vote with your feet’

Experts have urged savers to “vote with their feet” and ditch low-paying providers for those offering higher rates of interest.

Laura Suter, head of personal finance at investment firm AJ Bell, says: “As more people vote with their feet and shift their savings to a better-paying account, banks will face more pressure to raise rates to keep customers.”

The BoE has hiked interest rates 12 times in 16 months, leading to hopes of a better deal for savers after more than a decade of measly rates.

However, savings rates haven’t risen by anywhere near as much as official interest rates over the same period. This has led to accusations that banks are taking advantage of the fact their customers rarely switch accounts.

Moneyfactscompare.co.uk’s data shows how banks are paying much lower rates of interest to savers than they were 15 years ago. This is despite the fact official interest rates are at the same level now as they were back then.

For example, the last time official interest rates were 4.5% the average easy-access account paid 3.73%. Today it pays just 2.19% – some 1.54 percentage points less.

It means someone with £10,000 in an easy-access account is earning £154 a year less, on average.

Raw deal

The problem is not isolated to easy-access accounts, with savers earning significantly less across all product types.

Savers willing to lock their money away for 12 months currently earn an average of 4.18% a year – 1.61 percentage points less than in 2008.

Similarly, savers holding their cash in three and five-year fixed rates are on average paid 1 and 0.55 percentage points less, respectively.

Those worst off are holders of easy-access ISA accounts. According to Moneyfactscompare.co.uk, these savers earned 2.42 percentage points more on their money 15 years ago than they do today.

While banks are not obliged to pass on interest rates rises in full to savers, experts widely agree they are leaving their customers short.

MPs on the powerful Treasury Select Committee (TSC) recently called on banks to explain why they have been dragging their heels when it comes to passing on rate rises to their savings customers.

Calls for action

The calls for action have become deafening since it emerged that the UK’s biggest banks reported bumper profits in the financial year just gone.

A recent investigation by Mouthy Money revealed how banks made those profits by charging mortgage borrowers higher rates and underpaying their savers.

Hargreaves Lansdown, the investment company, calculated recently that savers are missing out on £23bn a year because banks are refusing to pass interest rate hikes on in full.

Experts claim banks were more readily willing to pass interest rate rises onto savers in the past than they are today.

Rachel Springall, personal finance expert at Moneyfactscompare.co.uk, says: “Base Rate is not as intrinsically linked to savings accounts as it was many years ago. Whilst there are some deals that rise in line, there are many providers that offer savings products which can see the interest rates offered rise or fall depending on their deposit targets.”

Suter says: “Banks respond to two forces: the Base Rate and competitors. They will use Base Rate as a gauge of whether to raise their savings rates, but of much more importance is what their competitors are doing.

“No bank is going to hike rates dramatically above the highest rival, as they only need to nudge it slightly over their competitor’s offering to win business.”

Pressure building

Regardless, MPs continue to apply pressure on the banks to boost the rates they pay savers.

Recently, Harriett Baldwin, chair of the TSC and the MP leading the charge against the banks, said: “Recent results announcements show that the UK’s biggest banks are continuing to squeeze record profits from their loyal savers.

“In a high interest rate environment, and with further Bank of England base rate rises possible, banks must do more to encourage saving.”

She added: “Consumers should continue to vote with their feet and find better offerings. This, more than anything, will drive the banks to increase their currently measly rates.”

A spokeswoman for UK Finance, the trade body representing banks in the UK, says: “Banks take a number of factors into account when determining the interest rate paid to savers or by borrowers. The Bank of England’s official ‘Bank Rate’ is only one factor. Other factors include the cost of raising funds, both in the retail and wholesale markets, capital and liquidity requirements, customer and regulatory expectations and the fact not all borrowers will fully repay loans.

“There is a wide range of cash savings accounts on the market and the interest rates offered are set by individual banks in competition with each other. The level of competition in the market is a key factor, alongside the nature of a bank’s own business model and customer strategy.”

How savings rates compare now versus November 2008

Source: Moneyfactscompare.co.uk; Rates based on £10k savings pot and are correct as of 30/05/23

Photo Credits: Pexels

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If you’re one of the 1.8 million borrowers whose fixed rate mortgage is up for renewal this year, you may be in for a shock.

Mortgage rates have soared over the past 12 months, meaning you’ll probably have to pay more when you remortgage.

Many borrowers are locking into longer-term fixes in case rates rise even further.

However, with the outlook for interest rates uncertain, that may not necessarily be the best idea.

To help you decide what to do next, Mouthy Money weighs up your options.

Why have mortgage rates risen by so much?

But first, why have mortgage rates risen so much?

In short, because the Bank of England (BoE) has hiked Bank Rate – the UK’s most important interest rate – to a 14-year high of 4% over the past 15 months.

That’s because the price of goods and services – otherwise known as inflation – has soared to a near 40-year high. There are a number of reasons for this, including the fallout from Covid, supply issues and the war in Ukraine.

The BoE hopes that by hiking borrowing costs people will spend less and save more, and thus prices will fall. That’s the theory, at least.

But that policy, of course, has a negative knock-on effect on mortgage borrowers.

When Bank Rate is rising, it tends to push up swap rates, which banks use to price their fixed-rate mortgages.

And so when swap rates rise, mortgage rates tend to as well. This is what we have seen over the past year.

According to data firm Moneyfactscompare.co.uk, the average five-year fixed rate has rocketed from 2.88% to 5% in the past 12 months.

On a £200,000 25-year mortgage that works out at an extra £234 a month. That’s a lot of money for people to find in the middle of a cost-of-living crisis.

However, there is a silver lining.

Rachel Springall, finance expert at Moneyfactscompare.co.uk, points out that rates have actually rolled back in recent months.

The firm’s data shows the average five-year fixed rate has fallen more than 0.6 percentage points since January. Two-year deals have fallen by 0.47 percentage points over the same period.

Springall says: “Mortgage pricing fluctuates for a few reasons, but thankfully fixed rates have been coming down over recent weeks, which is good news for borrowers looking for a new deal.”

If rates are falling, does that mean they will continue to fall?

Without a crystal ball, it’s impossible to say.

Markets – shorthand for professional investors – predict the BoE will stop increasing Bank Rate when it hits 4.5%. That is just 0.5 percentage points higher than now.

Those same observers believe the BoE may even start cutting rates at some point in 2023 or 2024.

However, investors are constantly revising these estimates based on what is happening to inflation and the wider economy.

For example, if inflation remains high, the BoE might decide to hike rates higher than expected.

On the other hand, if inflation falls quickly or the economy starts to struggle, the BoE may decide it has some scope to lower interest rates.

Either way, it will probably have a knock-on effect on the price of mortgages.

So what should I do now?

Typically, you can apply for a new mortgage once you have six months or less remaining on your existing deal.

If that’s you, now is the time to start shopping around or to get in touch with your mortgage broker.

A good broker will scour the market looking for lenders offering the best deals. But it’s also worth checking what your existing lender is willing to offer.

Sometimes, lenders offer what are called ‘product transfers’ or ‘rate switches’ to their existing customers. These have their benefits and drawbacks.

On the one hand, the fees on product transfers tend to be much lower, potentially saving you money. There is also far less paperwork and, often, you don’t need to pass another credit check. That’s handy if your financial situation has changed since you last took out a loan.

However, your current lender may not offer the best rates, meaning you could be missing out on a better deal elsewhere.

OK, got it. Should I go for a fixed rate then?

That’s a difficult question to answer as everyone’s circumstances are different.

Fixed rates are best suited for borrowers who want payment certainty, Hollingworth says.

That’s because the monthly repayment stays the same for the duration of the fixed rate period, regardless of what the BoE does with interest rates.

So, for example, if you take out a two-year fix, your monthly repayment will be fixed for two years. Likewise, if you take out a five-year fix, they will be fixed for five.

However, they often come with steep penalties if you want to break the deal early.

For example, let’s say you’re in the first year of a five-year fixed rate and you see a better deal .

To take advantage of that better deal, you’ll first have to break free of the five-year fixed rate you’re on. To do that, you’ll have to pay the lender’s so-called early repayment charge (ERC).

ERCs can be as much as 5% on a five-year fixed rate. Or, in other words, £10,000 on a £200,000 loan.

David Hollingworth, of mortgage broker L&C Mortgages, says: “Fixed rates give peace of mind which is something that households will be craving during such a volatile period of rising costs and high inflation. 

“Thankfully rates have dropped substantially since they rocketed after the mini Budget although they remain substantially higher than the ultra-low rates that borrowers have enjoyed in recent years. 

“That may mean that locking into a fixed rate is a useful way to ensure that the mortgage payment will not rise and fall with interest rates and give some budgeting security when other costs are fluctuating.”

The next question is: if you’ve got your heart set on a fixed-rate, how long should you fix for?

The answer to that depends on what you think will happen to interest rates. If you think interest rates will stay high, you might want to opt for a five-year fixed rate.

However, if you think interest rates will fall in the coming years, a two-year fixed rate may suit. That way you’re not locked into a more expensive deal long-term when rates are falling

It’s worth noting, though, that two-year deals are currently more expensive, typically, than five-year fixed rates.

Whereas the average five-year fixed-rate is currently 5%, the average two-year fixed rate is 5.32%, according to Moneyfactscompare.co.uk.

However, remember, those are average figures. You can get much better deals by shopping around.

In fact, someone with a 40% deposit can currently get a five-year fixed-rate from first direct for 3.99%. That works out at £1,054 a month on a £200,000 loan over 25 years.

Hollingworth says: “Unusually we have a situation where medium to longer-term fixed rates are lower than shorter-term rates. That’s because markets expect that the recent in spike in interest rates may stabilise over time, But with lower rates and an uncertain back drop, many borrowers will like the look of the lower five-year rates and the stability to ride out any further ups and downs.”

Ten-year fixed rates provide even more long-term certainty. However, Hollingworth says these products are not suitable for everybody.

He says: “Ten-year fixed rates can limit flexibility for the borrower if they need to review the mortgage and some will still be hoping that recent rapid rises in interest rates will ease back further over time. There’s no guarantee of that of course and longer-term fixed rates can be ideal for those that want to know exactly where they stand.

“Shorter-term fixed rates, on the other hand, are currently higher but some borrowers may feel that this is a temporary state of affairs and that interest rates may need to drop back once inflation eases.   

“If that transpires and interest rates fall then it could leave borrowers looking at a more competitive landscape when they exit a shorter-term fix. 

“However, there’s absolutely nothing to say that things won’t go against them and we’ve seen how rapidly market conditions and sentiment can shift.  It’s therefore worth thinking ahead in case rates don’t move as hoped.”

Another popular option, of course, is a tracker mortgage. Unlike with a fixed rate, tracker mortgages move in line with interest rates.

For example, if the BoE hiked interest rates by 0.5 percentage points tomorrow, your rate would jump by the same amount.

Currently, Halifax offers one of the best two-year trackers at 4.23% for those with a 40% deposit. That works out at £1,081 a month on a £200,000 loan over 25 years.

However, if the BoE raised rates by 0.5 percentage points, you’d end up paying £57 more a month.

Conversely, if the BoE cut rates by 0.5 percentage points, your monthly repayments would fall by £55 a month.

While trackers provide less certainty than a fixed rate, they are usually much more flexible.

For example, unlike fixed-rates, trackers often don’t come with penalties for ending the deal early.

Therefore, a tracker may be an option if you value flexibility and plan to ‘wait and see’ if the BoE reduces interest rates, as expected.

However, as Hollingworth points out, that’s a risk as there is no guarantee that will happen: “A variable or tracker deal does not give the protection against further rate hikes. 

“If rates don’t come back down then the tracker could prove more expensive and borrowers need to have the ability to deal with the potential for higher payments. 

“It therefore makes sense to opt for the deal that works best for you and some will prioritise peace of mind at such an uncertain and volatile point in time.”

Photo Credits: Unsplash

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With the cost of living soaring, it’s important to make savings where you can – including the weekly grocery shop – so take advantage of our Ocado discount.

Luckily, our Deal of the Week does just that.

We’ve combed the internet and found a voucher code offering up to £20 off your first order with Ocado, the online supermarket.

However, you’ll have to move fast as the offer runs out Saturday (5 March).

More about the Ocado discount

Ocado is a supermarket just like Tesco, Sainsbury’s or Lidl. However, it doesn’t have any stores.

Instead, you order what you want online and it is delivered straight to your chosen address.

Just because it only operates online doesn’t mean Ocado has a limited range. In fact, it is thought to offer up to 55,000 products, from essentials such as fruit & veg to kitchenware and garden furniture.

It is also currently the only website offering home delivery on Marks & Spencer food.

Ok, so what is the deal exactly?

Well, there are a number of them.

According to deals website LatestDeals.co.uk, Ocado is offering new customers £20 off if they spend £80 or more by Saturday (5 March). All you have to do is enter the voucher code VOU7814068 at the checkout.

If you don’t spend that much on grocery shopping, don’t worry. Ocado is also offering £10 off when you spend £60 or more. All you have to do is enter the code VOU8272993 at the checkout.

Why should I care?

With the cost of living soaring, every little bit helps.

And with the average family of four spending roughly £99 a week on groceries, having £20 off means you’ll save a fifth on the weekly shop.

What’s the catch?

Unfortunately, you need to be a new customer to qualify for the discounts. So if you already have an Ocado account, sorry but you can’t use this deal.

In order to qualify for the £20 voucher you need to spend at least £80 or £60 for the £10 voucher. However, items such as tobacco, postage stamps and instant formula don’t count towards the minimum spend. To a see the full list of the exclusions, visit LatestDeals.co.uk.

It’s also worth noting that Ocado doesn’t deliver to all parts of the country, so use its postcode checker (ocado.com/postcode) before placing your order.

Where can I find out more?

To find out more about this deal and other Ocado offers, visit LatestDeals.co.uk.

Photo by Doug Peters/PA Wire.

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Mouthy Money co-editor Paul Thomas sits down with digital investing platform EQi to tackle the most common myths about investing. In this episode, Thomas discusses market volatility, trading and how first-time investors should aim to ‘get rich slow’.

With thanks to EQi

Image courtesy of Pexels.com

The post LISTEN: Breaking down the myths about investing appeared first on Mouthy Money.

Mouthy Money co-editor Paul Thomas reveals the true cost of owning a dog.

A few Sundays ago, my partner and I were strolling through our local park in South London.

The route we take is usually reasonably quiet, but the beating sun and gentle breeze that day had attracted joggers and cyclists in their droves, meaning our peaceful walk turned into a game of ‘dodge the mouth breather’.

We manged to make it through unscathed until about two-thirds of the way through, when my girlfriend let out a noise that I can only describe as part gasp, part shriek, part groan.

What happened?  Had a cyclist hit her on their way past? Did a parent run over her foot with a pram? Had she fallen down a human-sized sink hole?

No – she had locked eyes with a Golden Retriever puppy, a little blob of fur with a glistening black nose, waggy tail and big brown saucer eyes.

In that split second, a decision was made, one in which I had seemingly little input. We were getting a puppy. And all I could think about was how much it was going to cost.

‘Buying a puppy fires up the part of the brain that takes over after six pints’

For the record, I don’t hate puppies – far from it. In fact, the idea of having a little Golden Retriever puppy makes me feel a little warm and fuzzy inside.

But I also like to avoid things that act as a drain on any cash I have left at the end of the month. So, with that, I looked into how much it truly cost to welcome a little puppy into your home.

Like buying a brand-new hatchback… that chews your shoes

Buying a puppy does something strange to you. It unplugs the part of your brain that makes sensible financial decisions and instead fires up the areas that take over once you’ve had about six or seven pints.

That’s why 98% of dog owners underestimate the cost of keeping their furry little friends alive, according to research from the charity The People’s Dispensary for Sick Animals (PDSA).

That can be anything from £4,500 to £13,000 over the life of the dog, depending on whether you get one that fits in your handbag or one that can eat you under the table. And that’s even before accounting for vet bills.

To put that into perspective, you can pick up a brand-new Fiat 500 for under £12,000 – and it won’t destroy all of your shoes.

Startup funds

Before you even take little Rover home with you, you need to make sure you have all of the kit to be a responsible and caring dog owner.

Things like a bed, collar, food, lead, microchipping, toys, vaccinations and water bowls are non-negotiable and need to be purchased up-front.

Like everything when it comes to pets, the cost of these items vary, but as a ‘ruff guide’ (get it?) you can expect to pay between £200 and £500.

‘Vets have a licence to print money, as my father will tell you’

Ongoing costs

Buying the basics is normally the biggest outlay, apart from buying the dog itself. But the costs don’t end there.

Depending on the size of your furry little friend, expect to shell out between £40 and £80 a month (or more depending on how thrifty you are). Here is a top-level breakdown of the biggest ongoing costs a dog owner faces:

Insurance: This is a big one. Insurer Bought By Many estimates the average dog insurance premium to be roughly £36 a month – or £436 a year. But the exact cost depends on the type of policy you go for, the age of your dog and its breed. Don’t just plump for the cheapest policy or you might regret it.

Lifetime policies offer the most comprehensive cover but are also the most expensive, whereas one-year policies are the cheapest – at the outset, anyway. If you choose a one-year policy, you may find the premium rises significantly as your dog ages – and you may find you’re unable to get cover at all once it reaches a certain age.

Food: An obvious one here but dogs love to eat – a lot. The Money Advice Service estimates that it costs anything up to £400 a year, or roughly £35 a month, to feed a dog.

Vaccinations and worm medicine: Vets have a licence to print money, as my father will tell you. It’ll cost you around £100 upfront for all of the vaccinations and then roughly £50 a year after that, according to insurer More Th>n.

Dog walker: Many owners will be able to save money by walking the dog themselves but those with hectic lifestyles will need someone to do that for them as dogs need plenty of exercise. Again, the prices here vary, but a quick scan of dog walking network Rover.com suggests the cost to be around £10-15 per walk.

The other stuff

It doesn’t end there. You also have to take into account kennel fees for when you go on holiday, the cost of ensuring your home is safe to house a dog, as well as a multitude of other outgoings, which I now have to look forward to.

But, as my girlfriend so gracefully put it: “Think of them not as expenses, but as an investment in a quiet life.”

Indeed.

Photo by Chevanon Photography

The post How a single glance from a golden retriever puppy cost me £13,000 appeared first on Mouthy Money.

There are endless delays, reams of paperwork to fill in and a load offees and charges you never knew existed. Thankfully, though, if you know they are coming, you can plan for them – and you may even be able to save some cash.

Property valuations

Banks won’t give you a mortgage unless you get a professional known as a surveyor to value the property first.

Unfortunately, these can be pricey. Expect to pay anywhere from £150 to £1,800, depending on how big your home is and what it is worth. A property worth around £250,000, for example, will typically set you back about £250.

But you can save yourself a packet by taking out a mortgage deal that comes with a free property valuation. If you don’t know where to look, try a mortgage broker. For a list of brokers near you, visit unbiased.co.uk.

If you want a more detailed report that assesses whether the walls and foundations are in good shape, you’ll need to pay for a survey. These are slightly more expensive than a basic valuation, costing up to £1,000.

Legal fees

There is a complicated legal process behind buying a home, so you’ll need to employ a solicitor or a specialist property legal expert known as a conveyancer.

They will conduct a number of checks, such as if there are plans to build a motorway nearby or if the property is at risk of flooding and will transfer the cash from you to the seller. This is an expensive process, meaning you will have to fork out in the region of £500 to £1,000.

Land registry fee

This is the fee you have to pay to when telling the Land Registry that you are the new owner of the property.

As with valuation and legal fees, the price is linked to the value of your property. This will cost you from £40 on a property worth up to £80,000 all the way up to £455 on homes worth more than £1 million.

Ok, it won’t bring you to your knees financially, but it’s an added – and often unexpected – cost, nonetheless.

Moving costs

Once the mortgage is all dusted and you’ve got the keys, you’re done. Well, almost. You’ve got to move you all of your furniture in first, of course. Sometimes the excitement of buying their first home means people forget this.

And you won’t be surprised to hear that removal firms can charge the earth.

The price usually depends on how far your gear needs to be transported and how many bedrooms your new pad has. For example, it costs roughly £806 to transport your stuff 50 miles into your shiny new three-bed home, according to comparison site comparemymove.com.

Alternatively, you can rent a van and do it yourself, which is likely to be easier on your wallet but not on your back.

…..I’m not at that stage yet

For many of us, getting on the property ladder may seem like a distant dream. However, there are things you can do to turbo-charge your savings without having to become a hermit.

It may be awkward to ask, but your parents may be able to help you out with a bit of a savings boost. If that’s a no goer, try asking if you can move back into the family home on a low rent. You may dread the thought, but it will help you build up a deposit much more quickly.

For those who would rather be jabbed with hot pokers than move back home, consider looking for cheaper digs or even sub-letting (a fancy property term meaning rent out a room in your property). Be careful here though as you will have to get permission off your landlord first and you may also have to pay tax on the money you earn.

Finally, why not enlist the help of the government? Last year the government launched a savings scheme called the Lifetime Isa to help people by their first property or save for retirement.

The idea is pretty simple: the government will add 25% of what you save each year up to a maximum of £1,000. For example, if you save £3,000 this financial year, the government will add £750 to your savings pot as long as you use that money to buy a home or as a retirement nest egg.

Ends

The post The hidden costs of buying your first home appeared first on Mouthy Money.