Mortgage Planning FAQs
Having a mortgage right now may be playing on your mind. There are several things you can do to manage your mortgage debt if your finances come under strain, or simply want to reduce the overall cost of your mortgage. Our FAQ may help by answering the most common questions you’re likely to be asking right now.
What happens if I can’t pay my mortgage?
If you think you won’t be able to make a mortgage payment partially or in full, it’s best to act immediately. Lenders are required to take all reasonable steps to help their borrowers manage their debt, before resorting to more formal steps, but it’s important to make your lender aware of any challenges you face as soon as possible. The Council of Mortgage Lenders (CML) also has a code for its members, which provide around 95% of all lending in the UK. The CML’s code includes rules and procedures to protect borrowers.
What can I do to reduce my mortgage outgoings?
You should speak to your lender about the options they can offer to help you reduce your mortgage payments. These may include temporarily giving you a ‘payment holiday’, although it will normally be subject to how well you’ve maintained your mortgage payments.
It’s important to remember that payment holidays are not free; any payments missed will be added to your existing mortgage and as such you will be charged interest on these missed payments. You may also find that the rate of interest changed on any missed payments may be higher than on the remainder of your mortgage.
What options other than a payment holiday do I have?
If you have a repayment mortgage, an alternative to taking a payment holiday might be to extend the term of your mortgage. Again, the lengthening of your mortgage term will mean that you’ll pay more interest over the whole term. You could consider converting to interest-only where you purely pay interest; but you’ll need to ensure you have a suitable repayment strategy in place to repay any remaining capital at the end of your mortgage term.
Can I use my savings to reduce my mortgage payments?
If you have a significant amount of money in savings, consider an offset mortgage, which will mean that you won’t receive interest on your savings, but your interest on your mortgage will be worked out on the net balance. For interest-only mortgages this may mean that your monthly repayment is reduced. If you have a repayment mortgage, you could shorten the term or possibly reduce your monthly repayments.
Your existing lender may be able to offer you all or some of these options, again subject to a satisfactory payment history. If not, you may need to move your mortgage. If you need advice or help, simply get in touch.
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