More homeowners to face payment shock

July is set to be a painful month for homeowners with cheap fixed-rate mortgages, with £30bn worth of deals due to finish this month, according to Moneysupermarket.

Its research shows 51% of homeowners whose mortgage deals end soon haven’t started looking for a new one.

The poll also revealed one in six have found a new deal but monthly payments will be so much higher they fear they will struggle with repayments. A further 18% have struggled to find a new deal they can afford or will be eligible for.

Louise Cuming, head of mortgages at Moneysupermarket, said: “Many homeowners will be plunged into a borrowing underclass in July when their fixed-rate deal comes to an end. Banks are cherry picking customers, leaving many people unable to find affordable deals to service mortgages taken out in better times, when they were plentiful and easy to get hold of.

“However, burying your head in the sand isn’t going to help. Anyone whose fixed-rate deal is coming to an end should start planning at least three months before the product is due to finish.

“You should approach your existing lender to find out what retention product they will offer you. This will give you a useful benchmark to compare against other offers.

“Compare rates across the market to get a rough idea if there are products available to beat those on offer from your existing lender. If you need some extra guidance, a broker should be able to recommend products to suit your circumstances.

“If you are confident you know which product is right for you, and that you are likely to be accepted, make the application directly to the lender. However, it is always worth double-checking the sums are correct and that all the costs have been factored in.

“Once you have made your choice, move quickly. Competitive deals are being pulled with very little notice and many people have been missing the boat by waiting to see if better deals pop up. In today’s mortgage climate, a bird in the hand is worth two in the bush.”