![]() The housing charity Shelter England says almost 2.5 million renters are either behind with or constantly struggling to pay their rent – an increase of 45% since April 2022.ĭata indicates average private rents in Britain have soared to record highs. More people are struggling to pay the rent. The property website Zoopla said this week: “The most likely outcome for 2023 is … a modest decline in house prices of up to 5%.” ![]() While some commentators have predicted property values may fall by 20%, others don’t agree. But finding a buyer at the price you need may be difficult if some of the forecasts for what could happen to house prices prove correct. This would give you a lump sum of money which you could use to pay off your mortgage,” Citizens Advice says. “If you can’t find any other way of clearing your mortgage debts, you might want to think about selling your property. Ultimately, the best course of action for some people may be to think about selling their home. “Lenders see repossession as a last resort, and the courts are very reluctant to grant a repossession order if the borrower has made an effort to pay,” Boulger says. The rules say that your lender must consider any reasonable request from you to change when or how you pay your mortgage. Write to them, saying why you are struggling to pay and what you can afford each month. ![]() It is much wiser to contact your lender first. If you get to the end of the month and let the direct debit bounce, then about two weeks later you are likely to get a letter or call from your mortgage lender. “You can ask your lender for a temporary interest-only period, which will significantly reduce your payments,” says Boulger, who advises borrowers to negotiate for as long a period on interest-only as the bank will grant.Ī £200,000 mortgage on a 6% interest rate and with a 25-year term drops from £1,289 a month to £1,000 if the borrower switches fully from repayment to interest-only. The other main option is to switch from a repayment loan to an interest-only loan. For example, Nationwide building society says: “You can apply to extend or reduce your mortgage term at any time.” However, it warns you will be affordability-checked and that you can’t apply if you are already in arrears. ![]() If you are, say, 50 years old and have 10 years left on your mortgage, extending it to 75 will make a big difference,” he says.īank of Ireland UK’s mortgage calculator shows that a borrower with 12 years left on a £150,000 loan will have to pay £1,463 a month at an interest rate of 6% but that this drops sharply to £966 a month if the mortgage is extended to 25 years.ĭifferent lenders may have different rules. “It will depend on your age, with most lenders offering a maximum age of 75. You can ask your lender for a temporary interest-only period, which will significantly reduce your payment John Charcol’s Ray Boulger Ray Boulger at the mortgage broker John Charcol says the simplest way to cut your monthly mortgage bill is to extend the term, though this will increase the amount of interest you pay overall. More than 6m existing UK mortgages are fixed, so for the time being these people are insulated from this latest interest rate rise. On a £250,000 home loan (repayment, 25-year term), a 2.25% rate would mean a monthly cost of £1,090, while on a 6.46% rate it would be £1,681. On Thursday this week the average new two-year fix was 6.46%. About a year ago the average new two-year fixed rate was priced at 2.25%, but in recent weeks typical new rates have leapt above 6%. It has also been a very tough time for anyone looking to take out a new fixed-rate mortgage. Are you on a variable or a fixed-rate mortgage? Photograph: BrianAJackson/Getty Images/iStockphotoįor the 2.2 million people on a variable rate mortgage of some sort, Thursday’s interest rate rise was very bad news and will mean many having to pay hundreds of pounds extra a year.
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