Mortgage payments may rise by £500

Mortgage rates are on the rise (Image: GETTY) Downsizing from a detached home to a semi-detached home across the UK could leave movers with a windfall of £205,157, new research shows. With more than 10 million people having difficulty with mortgage and loan repayment, experts suggested downsizing as a way to ‘boost your savings’. The number of people struggling to make loan repayments has risen by 40 percent, according to the Financial Conduct Authority. Those struggling with repayments should speak to their lender or the firm they owe money to in the first instance. However, another option to consider is downsizing, especially if all other avenues have been explored. One of the ‘most obvious and biggest selling points’ of downsizing is that less square footage = lower mortgage payments. The number of people struggling to make loan repayments has risen by 40 percent (Image: GETTY) If saving money has become a major priority, downsizing can be a great way for people to pay their mortgage off quicker than if they purchased a larger space. Downsizing from a current larger property may see people end up with a significant lump sum to pocket away and use as they wish. Down-sizers could be left with a windfall of £205,157, a figure which has increased by £8,681 since January this year alone, research from national estate agency Jackson-Stops has shown. Potential down-sizers make up 24 percent of all households aged 55 and over, amounting to 2.9 million homes. If all potential down-sizers decided to make the move, over £594 billion in equity could be released. Nick Leeming, chairman of Jackson-Stops, said: ‘Selling this much-loved asset, often a large, detached family home, is often put off until long after the kids have flown the nest. ownsizing can be a great way for people to pay their mortgage off quicker (Image: GETTY) ‘They might now be facing the prospect of a cold winter ahead, with many rooms completely unused. Downsizing, or rightsizing, can relieve this strain, releasing cash to enjoy life, whilst freeing up housing stock for the next generation of young families to enjoy.’ Similarly,  Jonathan Rolande , property expert from the National Association of Property Buyers explained that choosing a smaller, more affordable home can leave people with more money for other financial goals. It can be an ‘attractive option’ to reduce one’s cost of living. Around one million homeowners are set to pay at least £500 more on their  mortgage  payments by the end of 2026, the Bank of England has said. ‌A charity leader has warned many people may ‘lose their home’ as they come off their fixes and are faced with huge increases in monthly repayments. Pastor Mick, who runs  Church On The Street  said: ‘Many ordinary people are barely making it as it is – they simply cannot survive the expectation of paying an extra £500 a month, meaning they may lose their homes and be thrown into a cycle of poverty and homelessness.” As many people are all feeling the squeeze on finances, Tom Evans, an expert at Equity Release and Mortgage Partnership below explained that downsizing can be a great way to release equity in one’s property to ‘boost savings’ and that a smaller property may also be cheaper to run and easier to maintain. However, there are many disadvantages of downsizing in the current economic climate. A mortgage expert has urged Britons to factor in estate agent fees, solicitor costs, possible early repayment charges on the current mortgage and not to mention stamp duty on the new property. Britons are warned downsizing is not just about the money and anyone thinking that it could be a cost-cutting solution in the short-term must seriously consider the implications. Pete Harte,   Dashly , the mortgage insight specialists  said: ‘Downsizing is not a short-term solution for anyone planning to upsize again in the future. If prices trend downwards, you will have less equity to play with making it very tough to move to move up the ladder. ‘Plus, if the market gets saturated with properties at the upper end of the market, this could push prices down as it creates competition. Likewise, demand for lower priced properties could then push prices up which reduces the potential savings achieved. ‘If you are thinking about downsizing just to save money while costs are rising then there are other options. Talk to your lender about temporarily switching mortgages to interest-only to lower the monthly payments. ‘ You could also think about renting a room out or Airbnb options to generate some extra cash and help alleviate financial pressures.’ Can’t pay mortgage deal? Other steps you can take: Since the announcement of the mortgage charter, Mortgage holders: Can switch their mortgage deal to an interest-only plan for up to six months. Will also be able to extend the length of their term. Can Lock in a new deal up to six months ahead of their fixed-term ending. Are not allowed to have their homes repossessed within 12 months of their first missed mortgage payment. Can approach their lenders for advice on repayments without impacting their credit score. To take advantage of the support, borrowers should contact their mortgage provider directly.