As interest rates increase, mortgage rates increase as well, which means that growing numbers of people may find it harder to afford their mortgage repayments as a result.
If you believe you may not be able to make payments, even if it’s just one, it’s important to get in touch with your lender immediately so you can discuss your options. Your provider should be able to offer you support, but you can quickly run into financial difficulties if you don’t take charge of the situation.
Your lender may be able to offer you a temporary mortgage payment holiday, for example, which will see your repayments paused for an agreed-upon period of time. The payments you miss will be added to the loan, which means that you’ll ultimately pay more interest over time.
It’s also possible to temporarily switch over to interest-only payments, which means you’ll only be paying the interest on the mortgage instead of the capital amount. Similarly in this instance, missed payments will also be added onto the overall loan.
Another option is to extend your mortgage term to reduce your monthly repayments, although this is a more long-term course of action and you will likely only be offered it if you have a stable income.
If you’ve already missed making a payment, you will probably receive a letter from your lender. Again, get in touch with them as soon as you can after missing a payment, instead of waiting for a letter.
Missing a payment (or payments) is known as going into arrears and this is considered a priority debt. If you consistently fail to make payments, your home could be repossessed. Remember that missed payments will also show up on your credit report and this could have an impact on your ability to apply for credit in the future.
Talking to your lender will help you find the best course of action if you have missed a payment. If you’ve only missed one but know that you’ll be able to catch up with repayments the next month, your lender may allow you to add sums onto future payments until the debt is cleared.
They may also offer you the option to capitalise your arrears, which sees your debt added to the overall mortgage amount so you pay it back over the lifetime of the loan itself. Note, however, that this will increase your debt and will mean you’ll pay more interest.
There is a risk of repossession if you’re in mortgage arrears, but this is generally a last resort option and one that is only considered after all other routes have been exhausted. The lender must also go through the courts and obtain permission to repossess your home.
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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.
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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.
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