What if I can’t afford my mortgage payments?

Missing multiple mortgage repayments can lead to your home being repossessed. But taking action early will ensure you avoid losing your home. We discuss some of your options when you’re struggling to pay your mortgage below.

Why are mortgage payments going up?

Mortgages are getting more expensive due to worldwide soaring inflation, which is being caused by several international events, including the invasion of Ukraine and the aftermath of the global pandemic.

The Bank of England (BoE) is currently attempting to bring inflation down from over 10% to its 2% target. To do this, the BoE increases the base rate of interest, which is the amount of interest the high street banks pay to borrow money from the BoE. If the banks have to pay more to borrow, so do homeowners. The banks increase the interest rates on their mortgages to reflect and exceed the BoE base rate.

What to do if you cannot afford mortgage payments

If you cannot afford your mortgage repayments, the most important thing to do is not suffer in silence. Many homeowners are struggling to pay their mortgages due to the increased cost of everyday essentials – also due to inflation. But it’s so important not to bury your head in the sand. Take action as soon as you realise, you’ll struggle to make a repayment.

So, what sort of action can you take?

#1: Speak to your mortgage lender

Speak to your mortgage provider to explain your situation and ask how they can help. In most cases, your lender can provide a more affordable solution. The most common solution is to lower your repayments but extend your loan repayment period. This will make your immediate monthly repayments more affordable, but it won’t make your mortgage loan cheaper because you’ll pay back for longer.

#2: Ask for a mortgage repayment holiday

Another option is to ask your mortgage provider for a repayment holiday. During a mortgage repayment holiday, you’re not obligated to make any mortgage repayments. However, you should know that interest can still be added to the total debt during this time.

Many banks and building societies include the option for a repayment holiday for up to three months. The mortgage repayment holiday could allow you to bulk up your savings ready for future mortgage repayments. You might want to check your mortgage agreement to see if you’re automatically eligible for a payment holiday. Or call your provider to discuss this option.

#3: Consider remortgaging

You might be able to switch your existing mortgage deal to a new deal and save on repayments. This could be possible by securing a lower interest rate, or it could be possible by utilising a different type of mortgage such as an offset mortgage. Everybody’s situation is different so the best way to explore this option is with professional mortgage advice.

Our team at Euxton Mortgages can assess your exact situation to see if you can get a cheaper and more suitable mortgage. Call now for personalised mortgage help!

February 2023