July 16, 2023
As we are all well aware, the rising interest rates are having a significant impact on mortgage and rent payments. Whether you’re a first-time home buyer or a homeowner who is worried about falling behind, here is what you need to do if you’re worried about falling behind and you’re looking to get onto the housing ladder for the first time.
So, what do you do if your fixed-rate mortgage is ending?
1. First things first, talk to your lender about the mortgage rate
When your fixed rate ends, if you don’t act, your rate will automatically go back to the standard variable rate. The majority of lenders have a department dedicated to customer retention, and some of them offer preferential rates to existing customers. You can discuss your options with your mortgage provider.
Top Tip: The best time to start talking to your lender about new rates is around six months before the end of your current deal, so you can ensure you know what is available.
2. Secondly, always look around at new mortgage deals with other lenders
When you know what your current lender has to offer, it’s really important to compare it with all of the mortgage deals available to you.
If you need advice on obtaining a mortgage, it is best to speak to an independent mortgage broker. They can access the whole of the mortgage market. If your circumstances have changed since you arranged your last mortgage, they will take this into account.
Top Tip: If you decide to use a mortgage broker, don’t forget to ask about arrangement fees and early redemption penalties (if you want some flexibility to switch products before your agreement ends). Using a mortgage broker usually makes these charges clearer to understand.
3. Keep your plans in mind
At the moment, life is uncertain, but it’s important not to lose sight of the bigger picture. Talk to your mortgage broker about your financial needs and what’s important to you to help you decide which type of mortgage is best for you.
Things you’ll need to consider are:
• How much are you willing to pay a month? Choosing a fixed-rate mortgage usually means you will pay slightly higher rates than if you choose a variable-rate mortgage.
• Are you planning on moving in the next few years? If the answer is yes, you may want to choose a shorter-term fixed or discounted rate, or a mortgage rate with no early redemption penalties.
4. Review your budget
During increased mortgage payments, it is important to review your income and expenses to determine where costs can be reduced.
If you are having difficulty making your payments, it’s essential to communicate with your lender. To maintain the same payment amount, they may offer options such as extending your mortgage term.