Many borrowers are concerned about rising mortgage rates and worried about meeting their monthly repayments, either now, or when they come to remortgage.

This week the financial watchdog set out ways that mortgage lenders can help customers worried about or already struggling with their mortgage payments as a result of the cost of living squeeze.

The Financial Conduct Authority said it expects firms to support their customers in a way that meet their needs.

What can your lender do?

Your lender can help you to manage your mortgage in a range of ways, including:

Term extension: Extending the term of your mortgage can be a way to reduce your monthly payments, but it will increase the amount you have to pay back overall. If extending the term takes your mortgage past your expected retirement age, your lender may carry out an affordability check.

Moving to interest-only: This will reduce your monthly repayments as you will only be repaying the interest on the sum borrowed. Interest-only mortgages are only available to those who have a credible way of repaying the total amount at the end of the mortgage. This doesn’t mean relying on a potential future windfall such as an inheritance or bonus. You also can’t speculate that property prices will rise enough to allow you to buy a smaller home and still pay off the mortgage.

Temporarily switching to interest-only: A temporary switch to paying interest-only may be an option if you need to reduce your monthly payments for a short time. But if you only pay the interest, when you go back to repaying your mortgage, your monthly payments will be higher than before.

Contact your lender

Sheldon Mills, executive director of consumers and competition at the FCA, said: “Most borrowers are able to keep up with their mortgage payments and should continue to do so.

“But if you’re struggling to pay your mortgage, or are worried you might, you don’t need to struggle alone. Your lender has a range of tools available to help, so you should contact them as soon as possible.”

The regulator reminded borrowers that making changes to your mortgage, even temporary ones, may result in higher monthly payments in future or paying back more overall.

Because of this, mortgage borrowers should consider carefully any steps they take. If you can keep up with your mortgage payments, you should continue to do so.

Further support on the way?

Lenders and the FCA also met with the UK Government this week to discuss further support mortgage borrowers may require.

The regulator said it is monitoring the mortgage market ‘and will continue to act so consumers get the support they need’.