Mortgage payments often form a substantial part of expenses for households. As such, they may prove a financial burden, which many people will be l
Mortgage payments often form a substantial part of expenses for households. As such, they may prove a financial burden, which many people will be looking to avoid during the ongoing crisis. And with a wide range of support being withdrawn in October, many will have to manage their mortgage finances in a different way.
Express.co.uk spoke to Katie Brain, Insight Analyst at Defaqto, who provided further insight into how Britons can keep on top of mortgage payments.
She said: “There are a number of things that people should consider when trying to better manage their mortgage arrangement.
“The first is to maybe take advantage of the mortgage payment holiday while it is still available, although people should be aware this must be paid back, and will increase payments in the long term.
“Seriously think about this and whether it is right for you before simply jumping into an arrangement just because you can.
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Ms Brain continued: “It may be that you can reduce your payments by going interest-only, although it isn’t so easy to do at the moment.
“You could also speak with your lender to see whether it is possible to increase your term, which would decrease what you pay monthly.
“But this could end up increasing what you pay in the long-term, so once again, you should consider this carefully before taking this option.”
However, on the flip side of the coin, lockdown is likely to have been beneficial financially for some households, with people able to save money to put aside.
Some may wish to put the money they have saved towards their mortgage, thus bringing them closer towards their homeownership goals.
Ms Brain explained: “Mortgages are often a preoccupation for many people, so clearing this can be beneficial.
“Now is the time to be thinking about paying off some of your larger bills, particularly if you’ve managed to save from working from home, or doing something differently during lockdown which means you haven’t spent as much.
“Overpayments are the best way to go to reach mortgage free goals. If you get a little bit extra each month, a bonus, a lump sum or pay rise, then you can put this towards your mortgage.
“Whatever amount it is, even if it is £20 a month, can save you quite a lot in interest, or reduce the term altogether.”
However, Ms Brain also offered a warning, as for many fixed rate mortgages there could be penalties for overpayment that it is important to keep aware of.
She concluded: “As a typical, standard rule of thumb overpayment is usually set at 10 percent per year without incurring a penalty charge.
“But it is definitely worth checking with your provider to see the rules which apply to your specific agreement.
“Staying within that limit is especially important, as you could end up racking up charges you do not want or need when attempting to pay off your mortgage.”