Struggling to Pay Your Mortgage?
Many are struggling with much higher mortgage interest rates, worried about how they'll pay mortgage payments £100s more than what they've been paying. If you're anxious about how you'll make your mortgage payment, we at AgentSuite.uk have tips on how you can ease the pressure, including the Government's current support measures.
Already behind on your mortgage repayments?
This guide is aimed at homeowners who've NOT yet fallen behind on their mortgage payments (in other words, those who are not yet in mortgage arrears).
Many on older fixed-rate deals will be moving from interest rates of under 2% (or even 1% in some cases) to the current best-available rates which are nearer to 4% or even 5%, meaning you'll need to find often £100s extra each month.
It's best to do everything you can so you don't fall behind on your mortgage. That's because being in mortgage arrears can seriously affect your credit file and your ability to borrow in future. At worst, persistent arrears could result in you losing your home – in other words, repossession.
Step 1. Reassess your finances
Go through your budget in detail
This way, you can see if there is any spare cash available to put towards your mortgage. Go through all of your outgoings carefully to trim your costs down as low as possible. You'll then be able to see if you can meet your mortgage payment, or if you need to do more.
Are you entitled to any benefits?
If you've lost your job, get in touch with your local Jobcentre straightaway while you look for work. Even if you're still working, check if you're one of almost two million missing out on Government support. Some with a household income as high as £40,000 could still qualify for Universal Credit, especially if you've kids and/or high rent costs.
Claim on any mortgage payment protection insurance you have
Normally it'll pay out if you're unable to work through accident or illness, or if you're made redundant. Check if you have MPPI (Mortgage Payment Protection Insurance), Accident, sickness and unemployment policies, or Income protection insurance (IP).
Can you claim Support for Mortgage Interest (SMI)?
SMI covers your interest payments for the time you can't afford them. It'll normally cover (some of) the interest on the first £200,000 of your mortgage. The level of interest is set by the Government (currently 3.66%).
Step 2. Check if 'mortgage charter' support can help
Lenders representing 90% of the UK's mortgage market have signed up to the charter. You can EITHER switch to interest-only payments OR extend your mortgage term. Neither option will have an adverse impact on your credit history, though both will make your mortgage more expensive in the long-run.
Option 1: Temporarily switch to paying interest-only
This allows you to just pay the interest portion of the monthly payment for up to six months. Once the six-month period is up, your mortgage will revert back to its capital and interest repayment structure.
Option 2: Extend your mortgage term
By lengthening your remaining mortgage term – say from 15 to 20 years – you spread the repayment over a longer period, reducing the amount you need to repay each month.
Step 3. Need more help or already in arrears?
If the steps above aren't enough, you'll need to speak to your mortgage lender without delay. Simply contacting your lender to discuss your situation won't affect your credit file. Lenders can offer 'forbearance', such as reduced repayments, repayment breaks, or extending the term.
Tailored support CAN impact your credit file
Where you agree to tailored support, this can impact your credit file. This might result in an 'arrangement' marker being added to your credit file or arrears appearing if you are not making full contractual repayments. Missing, late, and partial payments can stay on your credit file for up to six years.
Free, Independent Debt Advice
Citizens Advice
Full debt and consumer advice service. Many bureaux have specialist caseworkers to deal with any type of debt, including repossessions and negotiation with creditors. Tel: 03444 111 444 (option 3). Web chat available Monday to Friday, 8am and 7pm.
StepChange Debt Charity
A full debt help service is available across the UK. Online support is also available via its debt advice tool. Tel: 0800 138 1111. Opening times: Mon-Fri, 8am to 8pm, Sat, 8am to 4pm.
National Debtline
Provides free advice and resources to help people deal with their debts. Tel: 0808 808 4000. Opening times: Mon-Fri, 9am to 8pm, Sat, 9.30am to 1pm.