With the cost of living rising high, and the increasing costs of mortgage repayments, many homeowners around the world are worried that they will not be able to meet their monthly payments.
For the U.K., the Financial Conduct Authority (FCA) has warned that more than 750,000 people are at risk of defaulting on their mortgage in the next two years. If this figure is realised, it will signal further economic woes and lead to an increase in homelessness.
In response to this, mortgage experts from the website Money.co.uk have provided readers with some tips on how to face the challenge of rising mortgage costs in 2023.
Introducing these, Kellie Steed, Mortgage Expert and Content Writer for Money.co.uk explains: “Many people will, understandably, be concerned about the warning about the impact of rising mortgage costs, following a number of increases to the bank base rate over the past year. Many of those looking to re-mortgage from a two year fixed-rate in particular, will have taken out their mortgage when rates were at an all-time low, meaning the increase to their monthly repayments will likely be substantial.”
The advice runs:
Speak to a mortgage broker
Steed explains: “Quick rate changes and unusual pricing trends – for example, longer term fixed-rates in some cases being cheaper than shorter term fixes – means that the mortgage market can be tricky to navigate right now. If you’ve not yet switched to a new deal yet, expert advice will be more valuable than ever in the current market, especially if you’re approaching your first re-mortgage.”
Speak to your mortgage lender
Here Steed advises: “If you’re struggling with higher repayments, or will begin to, once you’ve secured a re-mortgage, inform your mortgage lender at the earliest possible time. UK lenders are fully aware of the current financial issues many of their customers are facing, and the majority will be keen to find an affordable solution that will help them continue to repay their mortgage and keep their home. In fact, the FCA has written to lenders reminding them to provide tailored support to struggling borrowers and only charge fees which are fair and cover costs.”
She adds: “This could include; taking a short payment holiday, extending the length of their mortgage term, switching temporarily to an interest-only mortgage, or if their equity growth has reduced the LTV of their borrowing, potentially even offering them a slightly better rate.”
Keep making payments
On this subject, Steed proposes: “If you’ve reached the point where your mortgage repayments have become unaffordable, even after streamlining your outgoings and making cuts in other areas, continue making any payments that you can afford to against your mortgage whilst you try to resolve the issue.”
She follows: “As well as showing the lender that you’re doing all that you can, this will help curtail the unpaid amount you’ll need to clear to get back on track with your mortgage, as well as potentially minimise late payments charges and damage to your credit report.”
