Growing number of people unable to meet mortgage repayments
Average household income dropped by 8% between April and May and mortgage payments slumped 14%, according to the Institute of Fiscal Studies.
The research institute said, in a report published last week, that arrears on household bills continued to grow.
And it noted that the UK’s poorest households have been worst affected by the economic implications of coronavirus.
Following the report, Trussle has published guidance for those homeowners who are worried about keeping up with their mortgage payments in times of economic uncertainty.
The online mortgage broker offers the following tips to those who are looking for ways to keep on top of their finances:
Check the status of your mortgage
For the average borrower, the difference between a market-leading deal and the average Standard Variable Rate (SVR) is around £4,500 in extra interest each year. To find out when your initial fixed rate term is due to end, look at a copy of your original mortgage offer or call up your lender to find out. You should review your mortgage three to six months before the end of your initial period to give yourself enough time to find and switch to a new deal.
Consider taking a mortgage holiday
If you’ve been financially impacted by the coronavirus outbreak, speak to your broker or lender to explore the option of a payment holiday before making a decision. It’s worth noting that once the mortgage payment holiday is up, your monthly payments will increase slightly. This is because the additional interest is added to the total mortgage balance.
Some lenders offer other potential options, which include switching some of the loan amount to interest only payments in the short term. Any aspiring or existing homeowners who are worried about coronavirus and what it might mean for their mortgage should seek professional advice to discuss their options.
Consider switch to interest only
By adjusting mortgage repayments so that only interest is paid, homeowners could significantly reduce their monthly payments, easing some financial pressure. Check our guide to see if this might be right for you.
Check if you can save money by remortgaging
During these uncertain times, we’re encouraging all homeowners to keep an eye on their mortgage. Mortgages are often the biggest monthly bill that people face and two in five borrowers are missing out on a cheaper deal by sticking to their usual lender. By remortgaging, homeowners could potentially save hundreds of pounds on their mortgage each month. Find out how much you could save by using a remortgage calculator.
Look into product transfers
Homeowners who go through a product transfer save on average £326.31 a month, said Trussle. Check your eligibility for a product transfer with your existing lender and potentially save money.
Check your home’s energy efficiency
Making your home more energy efficient can be an effective way to reduce your expenses. There are a few ways to do this: you could switch your energy supplier or install a smart meter to monitor your energy consumption.