Struggling to pay your mortgage? If you answered ‘yes’ to that question, you’re not alone.
According to the latest data from Which?, an estimated 700,000 households across the UK missed rent or mortgage payments in April 2023.
This news comes as the cost of living crisis wages on, prices of food and non-alcoholic drinks are rising at the ‘fastest rate’ in over 45 years and the Bank of England increased its base rate for the 13th consecutive time in June — rising from 4.5% to 5%.
However, help is here
“Times are tough right now,” Jo Jingree, Mortgage Confidence’s mortgage adviser says. “Especially for homeowners who are on variable rate mortgages or those who are coming to the end of their fixed-rate deal.
“So if you find yourself unable to pay your mortgage, or you’re worried about how your state of affairs will look in the next coming months, please act now to assess your options. Help is out there.”
New mortgage measures
In a bid to help those struggling with mortgage repayments, on June 23rd, Jeremy Hunt, Chancellor of the Exchequer, met with UK lenders and the Financial Conduct Authority (FCA) to create a ‘Mortgage Charter’.
This new charter will offer extra tailored help, on top of the help lenders would usually give their customers.
For example, it includes letting people temporarily switch to an interest-only mortgage for six months. Or temporarily extend their mortgage term to reduce their monthly payments for up to six months. According to the new charter, both of these options can be done without a new affordability check or affecting your credit score.
At the time of writing this, lenders which make up 85% of the residential market have signed up.
So, if you can’t pay your mortgage…
The first call: speak to your lender
“A lot of issues come up when people bury their head in the sand,” Jo explains. “But lenders know that after taking out a mortgage, people’s particular circumstances can change from one month to the next. Be it a redundancy, illness or, as we’ve seen — rate hikes. So don’t let that railroad you,” Jo adds.
Most mortgage lenders have specialist support teams who deal with these kinds of situations.
“So before you fail to pay, the time to act is now,” Jo says. “If you continuously fail to keep up with repayments on your mortgage your home may eventually be repossessed. So before it gets to that point, get in touch with your lender to find out what route you can take.”
And the new Mortgage Charter backs this up. It says: “Anyone worried about their mortgage repayments can call their lender for information and support, without any impact on their credit score and we would encourage you to contact your bank who are there to help.”
What support is there?
What that support looks like is down to individual lenders and you and your personal circumstances. But for example, options could include:
- Extending the mortgage term, meaning you’ll pay your mortgage over a longer period which should reduce the monthly payments.
- If you’re on a repayment mortgage, there may be the option to temporarily switch to an interest only payment plan. This means you’ll only pay off the interest on what you borrow each month.
However, both of these options would only be offered as a temporary reduced payment plan and not as a long-term change to the mortgage contract.
If you’re not already in arrears, this is something a mortgage adviser can advise on, as well as your lender. “Of course these options might not be available or suitable for all,” Jo says. “But the sooner you act, the quicker you can find a solution.”
Speak to a mortgage adviser
Mortgage advisers can offer a helping hand. Especially if you’re unable to make sense of your situation.
Jo says: “Mortgage advisers have access to specialist lenders who deal with those who have impaired credit, reduced income and money troubles. And more often than not, these are not available on the high street.”
Worried about paying your mortgage this month (or the next)? Reach out to Jo to see if there are any other mortgages suitable for you.
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