My partner and I are finding it hard to keep up with our mortgage payments – we’re 10 years into our mortgage. We had a baby last year and my partner is working part-time now, so we have less money coming in and more going out. Our normal living costs seem to be going up too, with increases in fuel and energy bills. What should we do?
Diane Fish of Smith & Pinching responds:
There are a number of things that you might be able to do to help keep your mortgage payments manageable. It’s certainly a good idea to address the problem now rather than start defaulting on payments.
The first thing to look at might be the rate you are currently paying on your existing mortgage. If you took out your initial contract 10 years ago, your initial fixed rate may now have expired, and you may be paying a less competitive rate. It may make sense to re-mortgage to seek out a better rate and a new fixed rate period. However, it is important to bear in mind that a new offer would be based on an affordability assessment using your current earnings, and so you may be restricted to a lower mortgage amount. Another possibility might be to look at extending the term of your current mortgage, so that your monthly repayments are lower.
If things become so serious that you are in danger of defaulting, it’s critical to let your mortgage provider know. They may agree to a period of partial payments, to help you through your most difficult times – they’d rather have some money than none at all. They might also agree to a short break from mortgage payments, in some circumstances.
Defaulting on your mortgage will have an immediate effect on your credit rating and will have far-reaching consequences, so please take action before you get to that point. I suggest you speak with an independent mortgage adviser who will be able to review your current mortgage and help you move it onto a more manageable footing.
Your home may be repossessed if you do not keep up payments on your mortgage. We do not offer deals that you can only obtain by going direct to a lender. There will be a fee for the mortgage advice. The precise amount will depend upon your circumstances, and the type of lending taken. Smith & Pinching’s minimum advice fee is £950. Any opinions expressed in this article do not constitute advice.
For more information, please visit www.smith-pinching.co.uk
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