Managing your money is something you should always take seriously. It becomes even more important when you have a mortgage. Getting into financial difficulties could lead you to lose your home. With that in mind, here are some useful tips on how to manage your money when you have a mortgage.
Prioritise insurance
The whole point of insurance is to minimise your exposure to unpleasant financial surprises. This means that it’s particularly important when money is tight. If money is so tight you really need to watch every penny, then focus on getting insurance to cover your highest risk.
For practical purposes, these tend to be medical bills, legal bills and your home itself. In the UK, human medical treatment is covered by the NHS. Being ill or injured can, however, have serious financial repercussions. This means it can be a very good idea to have income protection insurance, critical illness coverage and/or payment protection insurance.
By contrast, pets can generate both hefty medical bills and hefty legal bills. Pet insurance can therefore be a wise safeguard. If you really can’t afford this, see if your vet offers their own treatment cover. You might be able to supplement this with third-party insurance for legal bills. If you cycle, then cycling insurance can also protect you against legal claims.
You’ll need insurance if you drive. You may also need life insurance under the terms of your mortgage. It’s advisable to ensure that your home itself is covered by buildings insurance. Contents insurance is also a sensible precaution.
Make sure you have emergency savings
If you’re self-employed, you’re probably only too well aware that invoices can be paid late. In fact, some invoices may not be paid at all (although hopefully very few). If you’re an employee, on the other hand, you may simply expect your pay to arrive in full and on time.
Generally, this is exactly what happens. Unfortunately, it’s not totally guaranteed. There are two main reasons why not. The first is that most businesses now take non-cash payments. That means they need to use payment processors. If these have technical issues, payments can get held up. These can result in staff getting paid late.
The second is that employers can go out of business without warning. This is even rarer but it does certainly happen. When it does, employees with decent emergency savings are better placed to weather the storm than those without. Remember, it usually takes time for other income to arrive (including insurance).
Be careful about how you use contracts
As a rule of thumb, the more committed you are to using something, the more sense it makes to commit to a contract. This is because committing to a contract tends to get you the best deal on price.
Probably the most obvious example of this is utilities. You know that you are going to need water, electricity and, in many cases, gas. For most people, the internet is also essential. Prices for all of these tend to be far lower on contracts than they are on pay-as-you-go. It therefore generally makes sense to commit.
By contrast, if you’re not sure, or if you know something is a want rather than a need, then you should think carefully about committing to a contract. If you want the service, then it can be prudent to pay as you go, even if it’s a bit more expensive. This gives you the option to drop the service quickly if your circumstances change.
You might even want to consider going without the service and setting the money aside. For example, exercising at a gym can be more fun than exercising at home. Paying off your mortgage early, however, could be even more fun.
Please contact us should you have any concerns regarding your mortgage or if you are considering remortgaging.
YOUR HOME MAY BE REPOSSESSED IF YOU DO NOT KEEP UP REPAYMENTS ON YOUR MORTGAGE
Approved by The Openwork Partnership 28/3/23
