At the moment, people’s mortgage payments are through the roof. This is because interest rates are higher than they have been in a very long time. The reason interest rates are up is because of the ongoing economic crisis, caused by COVID-19, and made worse by the conflict that’s taking place in Ukraine.
If your mortgage payments have risen and you are struggling to pay them, then you are no doubt worried about losing your house. Don’t worry though, this post will tell you what you can do to reduce your payments.
If your home’s mortgage payments are more than you can afford, then you might want to consider re-mortgaging your house. A lot of people’s houses are on variable mortgages, meaning their home’s interest rates rise and fall according to national interest rates. You can re-mortgage your house and lock in an interest rate for a period of up to five years. Locking in an interest rate (by getting a fixed mortgage) will help you to keep your payments down. According to the experts from Altrua, getting a consistent rate will help you to make savings. Re-mortgaging your house can be a very stressful process, but if you are on the brink of losing it, it is essential. Most mortgage providers try to make the process as simple as possible.
It’s certainly a lot simpler to re-mortgage now than it was in previous decades. Make sure you can afford your new repayments before re-mortgaging otherwise you run the risk of losing your house.
Another good way of reducing the amount of money that you have to repay towards your mortgage each month is to extend your mortgage term. Most people’s mortgages are for periods of around 30 years. If this is true for yours, then extend your mortgage if possible to a period of 40 years. Extending your mortgage term will mean that you have less to pay, especially if you have already paid a significant amount of your mortgage off. In order to extend, you will have to re-mortgage.
If possible, make early repayments. However, before you go ahead and start making early repayments, you need to make sure that your mortgage provider doesn’t charge early repayment fees. Early repayments are only usually possible if you have a large amount of savings. Making early repayments is a very effective way of bringing down the total amount you owe (and your monthly repayments). However, you should be aware that if your mortgage provider charges early repayment fees, making early repayments could be expensive.
If you are struggling to repay your mortgage, then you could reach out to your mortgage provider and ask them if they would give you a mortgage holiday. If a mortgage holiday is not possible, or if you do not want one, then you could ask your mortgage provider to allow you to reduce the amount you have to pay each month for a little while. Bringing down the amount that you have to pay each month until you have more money coming in will help you to keep your house. Mortgage holidays are not usually a problem though, most mortgage providers are happy to offer them.
Instead of paying off a huge chunk of your mortgage early, why don’t you just make larger repayments each month? While making larger repayments might seem silly if you are on a budget or cannot afford to pay your mortgage off, making larger repayments now will save you money in the future when things are worse. And, the way things are going, interest rates aren’t going to fall any time soon. That said, if you are on a very tight budget then do not overpay because it could mean you are unable to support yourself in other ways.
Asking for Help
If you are struggling to repay your mortgage, then don’t be ashamed to ask your friends or family for help. Losing your house is a big deal. If you cannot repay your mortgage, then your mortgage lender will take action, issue a default, and then repossess your property. In order to prevent that from happening, consider borrowing from loved ones. If possible, borrow a lump sum of money so that you can pay off a large chunk of your mortgage. Make sure you repay your loved ones on time if you borrow money from them, otherwise you could damage your relationships.
Interest rates are rising. For people on variable mortgages, this means that their payments are rising too. If you are one such individual, then use the advice given in this post to reduce the amount you have to pay each month.