List of help available if you can’t afford your mortgage repayments

Mortgage rates are on the rise Those renewing their mortgage over the next 12 months risk paying £3,456 on average each year, prompting many people to scour the internet to find what help is available to them. Google searches for ‘when will interest rates go down’ have shot up 487 percent in the last year. Many struggling families want to know ‘when will mortgage rates go down’ as they continuously look for predictions for when their repayments will finally drop. The average mortgage rate, according to Dashly, will jump from 2.29 percent to 5.23 percent. Dashly, the mortgage insight experts that monitor over £100billion in mortgages, extracted this data from a sample of 75,000 owner-occupied and buy-to-let mortgages with initial rates expiring between August 2023 and July 2024 and found average monthly mortgage payments could rise from £747 to £1,035. Homeowners who are remortgaging could be due to face a monthly payment rise of £288 on average. This results in an average increase in mortgage payments of £3,456 per year, equating to a 38.6 percent rise. Mortgage rates have continued to rise following the base rate increases This figure assumes borrowers switch to the best available rate instead of lapsing onto their Standard Variable Rate (SVR). According to the latest UK figures, more than 75,000 people were in mortgage arrears in the last three months. The number of households failing to meet their repayments is increasing. Around 81,900 homeowners were in mortgage arrears in the second three months of 2023, according to the latest figures from UK Finance – an increase of seven percent on the previous three months. Interest rates are on the rise What help is available if you can’t afford your mortgage payments? 1. Mortgage Charter The Government introduced a mortgage charter to help struggling homeowners. They can get support from their banks and this could include temporary interest-only repayment arrangements or a pause on home repossessions for those missing payments. Consumer rights expert Martyn James explained to Times Money Mentor that an interest-only mortgage means people only pay the interest on the mortgage but not the cost of the property itself. The ‘obvious problem’ here is they will not end up owning the property unless they have an alternative way of paying off the debt. A lender will usually want to know how borrowers intend to do this too. However, if this is a temporary option, then the lender may allow people to switch to an interest-only deal temporarily. For more information on what the charter includes, people can visit the Government website. SUBSCRIBE Invalid email We use your sign-up to provide content in ways you’ve consented to and to improve our understanding of you. This may include adverts from us and 3rd parties based on our understanding. You can unsubscribe at any time. More info 2. Extending your mortgage term Additionally, Mr James explained that Britons can extend the term of their mortgage meaning their payments will reduce. However, it should be noted that the amount of interest they pay will ultimately be higher. They may also face challenges if the new term takes them past what their lender thinks their retirement age will be. Borrowers should ‘be prepared to answer these tricky questions’. 3. Support for Mortgage Interest (SMI) The Chancellor announced the expansion to the Support for Mortgage Interest (SMI) scheme in last year’s autumn statement. The scheme is available to certain households who receive certain benefits, such as income support, jobseeker’s allowance or pension credit, and who are struggling with their mortgage. The support is actually a loan with the payments being made directly to the lender. It helps to cover interest payments on up to £200,000 of your mortgage — or £100,000 if you’re receiving pension credit. Claimants will be liable for interest on the government loan which they will have to pay off eventually. The rate is currently 3.03 percent, though this can go up or down. For more information, people can check the Government website. Trending