The mortgage picture has brought a tidal wave of uncertainty to many households in recent months, but help is available!
With the cost-of-living crisis hitting people in the pocket, many are concerned about covering their mortgage repayments. Others are facing large increases in costs as their current, more favourable fixed term mortgage deals end.
As ever though, there’s often a more nuanced picture to delve into, and Brenda Kibblewhite at This Land discusses the help out there.
“Working alongside the UK’s principal mortgage lender, in June the Government announced a new charter to provide a package of support for people struggling with their residential mortgage repayments.
Measures included the opportunity to call lenders to discuss support without impacting credit scores.
Customers approaching the end of a fixed rate deal will also be offered the chance to lock in a deal up to six months ahead, whilst being able to apply for a better deal until their new term begins.
To directly address the affordability of mortgage payments in the current financial landscape, homeowners are now permitted to switch to an interest only mortgage for six months. Alternatively, they can extend their mortgage term for six months to make repayments more manageable.
Both of these measures can be applied by a mortgage lender without an affordability check or affecting credit score.
In certain circumstances, mortgage lenders are also required to consider further options like a temporary payment deferral or part interest-part repayment, dependent on a customer’s circumstances.
There’s no doubt that interest rates increasing in an effort to stem inflation, has seen a knock-on effect to homeowners.
The measures introduced in the Government’s charter aim to assist people who unfortunately found themselves within the 0.86% of total residential mortgage balances in arrears during the first quarter of this year, according to Financial Control Authority figures.
Those seeking solace over a longer period, can perhaps be encouraged that current figures are still below pre-pandemic levels, which were themselves low compared to the 3.32% of mortgage balances in arrears in 2009.
The FCA also reported that for many, disposable income is still more readily available now in 2023, with the proportion people are paying on mortgage payments lower at 5.4%, compared to the approximate 10% in the 1990s.
So there is room for a more optimistic outlook that things will turn.
However it’s important that homeowners who are finding themselves in a position of plight month to month, understand the opportunity through the newly announced charter to approach their lender to discuss as soon as possible.
The measures should ensure a level of protection by the UK’s principal mortgage lenders, without the fear of an impacted credit score or missed payment charges biting further down the road.
“For those who seeking further advice with their mortgage situation, contact This Land’s Mortgage partner company Just Mortgages”.
Email Neil.Waller@justmortgages.co.uk or call 07812 173985 / 01206 765599