MARTIN Lewis’ MoneySavingExpert.com has issued an urgent warning to mortgage owners and revealed three checks to make now.
The Bank of England (BoE) recently hiked its base rate from 5% to 5.25% in a bid to slow runaway inflation, which stood at 7.9% in June.
Martin Lewis has issued an urgent warning to mortgage holders
But any increases in the rate are generally mirrored in mortgage holders’ rates as well.
Martin Lewis’ MoneySavingExpert.com issued a warning about the rise in its most recent newsletter.
It said: “The Bank of England raised the base rate to 5.25% last week, with experts forecasting it’ll peak at about 6% by early 2024 before gradually retreating.
“All of which means the cost of tracker and variable mortgages is still rising, while uncertainty lingers for the 2.4m who have fixed-term deals ending before the end of next year.”
But, it added: “Fixed rates have at least edged down slightly, plus new help’s available if you’re struggling to pay your current mortgage.”
The consumer website went on to explain three major checks you can do now if you are worried about your mortgage rising.
Find the cheapest new mortgage now
Anyone on a fixed-term mortgage deal which is coming to an end can, in most cases, lock in a new rate six months before it’s due to expire.
So if yours is coming to an end it might be worth taking a look at what’s on the market now.
You should start by finding out what type of mortgage you’re on, what your rate is and how long the term is.
Then you can check what’s out there on the market by using mortgage comparison tools.
After you’ve found a deal you can check what you’ll be paying on it by using a mortgage calculator.
At this point, it’s worth checking your credit file and boosting it in whichever way you can.
You can decide to go with a deal you’ve found yourself, but you can go to a broker as well who will be able to find lenders more likely to accept you.
Plus they might be able to give you access to exclusive broker-only deals.
Remember, you may have to pay a fee to use a broker’s services though.
New mortgage support available
Most big UK lenders have signed up to a new mortgage charter offering struggling households more support.
The charter means customers coming to the end of a fixed-rate deal now have the chance to lock in a new one up to six months ahead of time.
Plenty of lenders already let you do this, but the charter means households have more certainty.
The new charter also means homeowners can now approach their lender for advice on repayments without impacting their credit score.
Plus, they can change their mortgage to interest only and extend the terms of their loan.
Again, this has no impact on the homeowner’s credit score and homeowners can then go back to their original plan within six months.
Start prepping now
Even if you are on a cheap fixed-term mortgage deal and have more than six months left to run, it’s worth preparing now.
When your current deal ends, you’ll likely be moving to a more expensive one.
So you should set a reminder for six months before your current fix ends.
Plus, you should save whatever money you can now to reduce any further mortgage repayment hikes.
You can do this by putting any spare cash you have into a savings account with high interest rates instead of overpaying on your mortgage.
You can use a mortgage overpayment calculator to figure out how much making overpayments could reduce your mortgage term and interest though, if that’s an option you want to take.
Do you have a money problem that needs sorting? Get in touch by emailing [email protected].
You can also join our new Sun Money Facebook group to share stories and tips and engage with the consumer team and other group members.
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