How to cope with the rising cost of mortgages: Tips for homeowners
The cost of mortgages has been going up for last several months. In fact, there seems very little respite in store for borrowers, in spite of predictions of further cuts in interest rate in the coming months. The scenario leaves millions of hassled homeowners at risk.
According to one estimate by the Financial Services Authority (FSA), well up to 1.4m homeowners could struggle when their fixed-term mortgages get expired this year. Borrowers with a fixed-rate repayment mortgage of up to £200,000 could end up with monthly payments with an increase of up to £200 a month.
Homeowners are now being urged not to default on any dues on their credit cards or mortgages since this could well affect their credit record. They are being advised not to stop or miss payments of dues as this could result in the loss of their homes.
What other advice is there for homeowners in these tough times? Well, they should talk to their lender about any difficulties being faced in repayment. A lender is less likely to drag a defaulter to court if the latter is communicating.
Homeowners should ask their lenders if they can cut down monthly payments or suspend them for a while to overcome temporary credit problems.
To cut costs, they should find out if the lender is agreeable to extending the period of mortgage or convert it to interest-only basis from repayment basis.