For most people in the UK mortgage payments represent the biggest section of their disposable income. With rising UK house prices, to get on the property ladder, often involves borrowing as much as the banks are willing. However with the recent rise in base rates homeowners are starting to feel the pinch of mortgage payments more than ever. If you are a homeowner struggling to meet your monthly mortgage payments there are various things that you can consider.
1. Take stock of your financial situation. Look at all your incoming income and outgoing expenditure. Also list all the various debt that you have.
2. Reduce other Expenditures. Look at your monthly outgoings and see what is essential and what could be reduced. For example switching to online payment of electric and gas suppliers can often save money. Maybe you can do without the Sky subscription for awhile.
3. Consider remortgaging. This is probably the most significant way of saving money, especially if you are on your building societies standard variable Rate. There are many mortgage deals which are likely to give you a better deal and reduce your interest payments.
4. 40 or 50 year Mortgages. Many people dislike the idea of having a mortgage for 50 years. They worry whether they will be able to pay when they are retired. Also overall interest payments will be higher. However it is worth remembering that over time a mortgage payment becomes more manageable to pay, because it doesn’t rise with inflation. If you ask someone who has been paying a mortgage for 20 years you would be surprised at how little their monthly payments are. At the end of the day it is better to get a 50 year mortgage than have the house repossess and to end up paying rent (which will rise in line with inflation or more)
5. Interest Only Mortgages. Consider switching to interest only payments. This will reduce your monthly mortgage payments however it is high risk because it assumes you are able to save enough capital through an alternative investment scheme. To pay off the capital debt in the future.