The Bank of England have announced a further rise in interest rates to 2.25%, which is the highest level for 14 years. Experts predict that they may even rise further by the end of the year, in an effort to tackle high levels of inflation.
This means that for households with a mortgage, they will be facing higher monthly repayments, either immediately or when their current deal comes to an end. About a third of all households in the UK have either a fixed or tracker mortgage, according to the BBC.
Compared to late 2021, most monthly mortgage repayments are already between £160 to £216 more, depending on the type of mortgage deal. This is at a time when budgets are being squeezed by higher grocery, fuel, and energy bills. It is not surprising that some mortgage holders have fallen into arrears with their payments.
So, what should you do if you just can’t balance your income and outgoings any more, and you have already trimmed all the fat off your monthly budget? This is a circumstance which millions more families are facing, through no fault of their own.
The most important thing to do is speak to your lender as soon as you recognise the problem. Whatever your circumstances, avoid simply underpaying or defaulting on your repayments, as this will adversely affect your credit score. Once you have a bad credit record, it will make it more difficult for you to secure a good mortgage deal in the future.
Your lender may be able to arrange a temporary manageable payment plan for you. This could be a period of reduced monthly repayments, or a complete deferral until you are in a better position. Another option may be to extend your mortgage term, so that you are paying over an extended number of years.
There may even be more suitable mortgages on the market to match your needs. It may be worth seeking remortgaging advice from a specialist mortgage broker to discuss your options.
Your home may be repossessed if you do not keep up with your mortgage repayments.
There may be a fee for mortgage advice. The actual amount you pay will depend on your circumstances. The fee is up to 1% but a typical fee is £595.
Back to Blog
Create Finance Limited is an appointed representative of Mortgage Advice Bureau (Derby) Limited which is authorised and regulated by the Financial Conduct Authority.
Create Finance Limited. Registered Office: 35 Friar Gate Studios, Ford Street, Derby, Derbyshire, England, DE1 1EE. Registered in England Number: 09582938.
Think carefully before securing other debts against your home. Your home may be repossessed if you do not keep up repayments on a mortgage or any other debt secured on it. There may be a fee for mortgage advice. The actual amount you pay will depend on your circumstances. The fee is up to 1% but a typical fee is £595.
The guidance and/or advice contained within this website is subject to the UK regulatory regime, and is therefore targeted at consumers based in the UK. The actual rate available will depend upon your circumstances. Ask for a personalised illustration.
We may receive commission that will vary depending on the lender, product or permissible factors, The nature of any commission model will be confirmed to you before you proceed. Create Finance Ltd are a credit broker, not a lender.