Are you worried about being able to afford your mortgage payments?
Thursday 26 October, 2023
Stories of people facing the daunting prospect of seeing huge increases in their monthly mortgage repayments are regularly making the news. With many fixed rate deals coming to an end in the near future, there are borrowers now wondering what options are going to be available to them. This is especially the case for those struggling to meet the repayments.
We have written this article to highlight some of the options that are available to people struggling with their mortgage repayments.
Speak with your mortgage lender
If you find yourself in the position where you will struggle to afford your mortgage repayments, then your first action will be to speak to your mortgage provider. Each mortgage lender will have a different approach and policies for helping struggling customers. However, they have a duty to be responsive and will try to help. They can assess your individual circumstances and help explain your options.
Common approaches might include:
1. Offering you the option to defer a payment – payment holiday
A payment holiday means you are taking a period away from paying your mortgage. Often this can be for a few months. However, you should be aware that you will continue to be charged interest over this time and will be expected to catch up with the payments before your mortgage ends.
You should be aware that this option is not offered by all lenders or mortgage products. It is often the case that to qualify for a deferred payment, you may have previously overpaid on your mortgage or have a good payment history.
2. Extending your mortgage term
By extending your mortgage term it can help to lower your monthly repayments. There could several reasons for looking to extend your mortgage term. It could be the cost-of-living expenses hitting the household budget or possibly your income has fallen.
However, it’s important to recognise that by increasing your mortgage term you will increase the overall total of interest you pay.
3. Moving to an interest only mortgage
For those that maybe struggling on a fixed rate mortgage, you may have the option to switch to an interest only mortgage. This switch will help to lower your monthly payments, as you will only be paying the interest on the mortgage. It means that you will only be paying interest on the mortgage, not paying anything on the capital itself.
By switching to an interest only mortgage, it can be helpful for the short-term, however you will still need to make sure you can repay the capital at some point before the end of the mortgage term.
The route you take will depend on your personal financial situation. It is also worth noting that, over time, your situation may change again, which means you may need to adapt again.
Speak with your mortgage adviser
Gulay Dugunyurdu, Mortgage Adviser in Enfield, North London said:
“As well as speaking with your mortgage lender, it is also strongly advised that you speak with a professional mortgage adviser. The mortgage adviser will have access to the latest information with regards to the range of alternative mortgage products available.
Your mortgage adviser will be able to undertake a detailed review of your financial circumstances and be able to assess the lenders they work with to help find a mortgage that matches your specific needs.
Mortgage advisers will have access to mortgage products that may not be available on the high street. Therefore, they could find a better mortgage option for you.”
If you would like to review your current mortgage deal and discuss your options, then please give our mortgage advisers a call on 01707 872000, they are on hand to help.
The Money Helper website provides additional guidance for home owners: Mortgage arrears or problems paying your mortgage
YOUR HOME MAY BE REPOSSESSED IF YOU DO NOT KEEP UP REPAYMENTS ON YOUR MORTGAGE.
This article is for guidance purposes and does not constitute advice.
Approved by The Openwork Partnership on 25/10/2023.
