With the current cost-of-living crisis, homeowners are seeking out new ways of ensuring their daily costs are low, and one way you can do this is to revisit your current mortgage. From energy bills to rising food costs, every pound helps and you certainly won’t want to fall behind in your mortgage payments. If you’re struggling to pay your mortgage, it’s important to take steps quickly to avoid going into debt which could ultimately lead to you losing your home.
It may be possible to find a more affordable mortgage deal with another lender if you are on the standard variable rate. There may be charges incurred for switching, but this could be worth the move in the long term. The standard variable rate is the interest rate that kicks in when an initial introductory deal on a fixed or tracker mortgage expires.
Some homeowners enjoy the freedom that an interest-only mortgage brings. The monthly repayments involve only the interest on the loan, and this does not take into consideration the initial capital sum borrowed. Payments will not be as high as a repayment mortgage but at the end of the term, the original capital borrowed from the lender will have to be paid back. Means of repayment of the capital must be considered carefully.
Look at extending the mortgage term
Ideal for some, lengthening the term of the mortgage means a lower payment each month, but this will continue over a longer period. More interest will be paid, so overall, this will end up costing the borrower more. Other homeowners may choose to downsize and obtain a cheaper mortgage. People on the move may be aware that a home buyers report cost can vary among professionals, but there are a range of specialist firms such as Sam Conveyancing who can help with this.
There is good news for homebuyers according to The Financial Times as the market re-settles after September’s ‘mini’ budget and the Autumn Statement. Some mortgage rates on five-year fixed deals have moved below six per cent for the first time in almost two months.
Some couples and families may wish to take a mortgage holiday if they are facing adverse financial circumstances. A payment holiday may be available at the lender’s discretion and it’s worth checking the small print in the mortgage paperwork. However, if you have fallen into mortgage arrears, you will unfortunately not be eligible for a payment holiday.
It may be worthwhile looking at reducing your mortgage insurance. Some lenders may require insurance before allowing you to borrow money to buy a property. Furthermore, most homeowners prefer to have some sort of financial cushion in place in case of illness or inability to work.
A good budgeting plan can help save money which can be put towards your mortgage. Making cutbacks on unnecessary purchases, takeaways and nights out or even increasing your income by taking on a part-time job may be necessary to avoid getting into debt. There are plenty of online budgeting tools that will help you plan and manage your financial affairs.