Many people today are having difficulty making ends meet.  The recent Increases in interest rates appear to be causing stress and worry for some people. Their biggest concern centres around  their ongoing mortgage repayments considering the current mortgage interest rates prevailing currently. Depending on the size of the client’s mortgage balance, this can amount to hundreds of pounds every month on their mortgage payments.

Many people have been fortunate over recent years, especially when the bank of England base rate was much lower when they secured the deal they are currently on, this would now be considered a relatively low fixed rate of interest, however as noted above these schemes are starting to come to an end.

At the same time many people are starting to receive their 2024 council tax, and water rates bills and noting a rather large increase in these commitments as well.

There is help available –

Firstly, re-assess your finances – is there anywhere at all you can make savings that could go towards your mortgage payments?

Speak to your current mortgage lender or a financial advisor.  The Government along with the FCA launched a Mortgage Charter which is there to help lenders offer support if they are struggling with payments.  Neither of the following suggestions affect your credit file.

Anyone worried about their mortgage repayments can contact their lender for help and guidance, without any impact on their credit file and we would encourage you to contact your lender who are there to help If you have a repayment mortgage. Lenders will offer tailored support for anyone who may be struggling, and they will deploy highly trained staff to help customers. The right option will be dependent on the customer’s personal circumstances. Below we have listed some of the considerations that can be undertaken:-

[A] Switch to Interest Only – You can ask your lender to switch you to an interest only mortgage for a short period of time, typically for 6 months.  It must be noted however that your mortgage balance will not reduce whilst you are this type of scheme, you just pay the interest that is due to the lender every month. This will result in lower mortgage repayments for you thus allowing you to sort out your finances. Please note that this is not a long-term fix, and you will only be allowed to move to this scheme for 6 months typically.  

[B] Request an extension to your mortgage term – You can also ask your lender to extend the remaining term of your mortgage which will reduce your monthly repayments for you.  You will need to contact your lender to discuss this option with them and it will be dependant upon your personal circumstances. Your lender will need to fully validate that you will be able to make and maintain the new revised monthly repayment, additionally your age may limit the length of time that you can extend your mortgage. In some cases, your lender may not allow you to exponent the mortgage term especially if the extension take your mortgage beyond the maximum age allowable for your lenders criteria.

 [C] Seek Mortgage Advice – One of the first steps you can take when faced with high interest rates is to seek advice from a mortgage professional or financial adviser. They can provide guidance on your specific situation and help you understand your options. Depending on your circumstances, you may be able to switch to a more affordable mortgage product.

[D] Discuss the possibility of  Mortgage Payment Holiday – If you are experiencing temporary financial hardship due to the high interest rates, you can enquire with your lender about the possibility of a mortgage payment holiday. During such a break, you can temporarily suspend or reduce your mortgage payments, therefore providing you with some breathing room. Please be aware that the interest will continue to accrue during this period, therefore this should not be considered as a long-term solution.

[E] Debt Consolidation – Dealing with high interest rates can be challenging if you have other debts, such as credit card balances or personal loans. Consideration can be given to consolidating your debts into your mortgage which may potentially offer a lower overall interest rate. This strategy can help simplify your finances and reduce your monthly debt repayments.

[F] Review Your Budget – In times of high interest rates, it is essential to reevaluate your budget. Identify areas where you can cut back or reallocate funds to cover higher mortgage repayments. Reducing discretionary spending or finding ways to increase your income can help you maintain financial stability. 

The above options can typically be taken by customers who are up to date with their payments and,  in some cases without a new affordability check or the action affecting their credit score. Customers who are currently in arrears should continue to work with their lender for the support that they need.

https://www.gov.uk/government/publications/mortgage-charter/mortgage-charter

The return to higher interest rates in the UK can be a source of concern for mortgage borrowers, but it is important to recognise that there are various avenues of assistance and strategies available to navigate this challenging landscape.

Seek advice from professionals, explore government schemes, consider alternative  mortgage schemes, and review your budget to find the best approach for your specific situation.

While interest rates may rise and fall, your financial stability can be secured. Prudent planning and access to the resource is designed to help homeowners thrive in the current economic environment.  Remember, you are not alone, there are options to support you through what may appear to be challenging times for you of your family. 

Think carefully before securing debts against your home. Your home may be repossessed if you do not keep up repayments on your mortgage or any other debt secured on it. Please note that some mortgages such as commercial BTLs are not regulated by the FCA. Commodore Finance Ltd (461175) is an appointed representative of Julian Harris Financial Consultants (153566), which is authorised and regulated by the Financial Conduct Authority.