Martin Lewis offers advice on mortgage overpayments
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Earlier this week, the Bank of England raised the base rate to a 13-year high of one percent to combat inflation. A consequence of this is that households should expect to pay more towards their mortgage due to the hike in rates. Research carried out by TotallyMoney found that a rise to one percent would increase mortgage payments by £99 per month or £1,188 per for a 75 percent LTV mortgage on the average UK property costing £270,708.
As it stands, one in four mortgage holders do not have protection against interest rate increases and are currently dealing with higher payments.
TotallyMoney’s analysis found Londoners will experience the highest mortgage payment increases with repayments going up by over £1,800 a year.
Speaking exclusively to Express.co.uk, Alastair Douglas, the CEO of credit app TotallyMoney, discussed what people can do to mitigate the impact of soaring mortgage repayments.
Mr Douglas explained: “The first thing anybody should do is to check their credit report to make sure all the information is correct and up to date.
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“Doing this as far in advance as possible will mean they can fix any errors and work on improving their score if needs be.
“Lenders will be looking at this information during the decision-making process — a better score and a complete credit profile will often unlock better, and cheaper deals.
“Customers should also do their research and make sure that they have a good understanding of how mortgages work, including what to look out for, such as arrangement fees.
“It’s also important customers shop around for the best deals, and using a broker can help them find the best offers.”
Andrew Hagger, personal finance expert from Moneycomms.co.uk, spoke exclusively to Express.co.uk about how long savers can expect to see these rate hikes continue.
Mr Hagger said: “With the government having to pull out all the stops to bring inflation under control, it’s likely that base rate and mortgage rates will continue to edge upwards during the remainder of 2022.
“The Bank of England will be mindful of the impact of higher home loan costs on household budgets, but tackling inflation appears to be the overriding priority at the moment.”
However, there are options available for homeowners who want to see if they can reduce their mortgage payments through more traditional ways.
According to Mr Douglas, services such as TotallyMoney allow people to explore what options they have available to them when it comes to the mortgage market.
He added: “Our service also provides customers with personalised borrowing recommendations. An example of this will be for those with interest-bearing credit balances who should consider taking out a balance transfer card.
“These cards will usually charge zero percent interest for a set period of time — currently up to 34 months.
“This means 100 percent of their repayments will go towards clearing the debt and not towards paying interest.
“Customers can therefore pay their debts quicker and cheaper, or use the money saved to cover the rising cost of living.
“If they’re on a variable rate mortgage, that may include their mortgage repayments.”
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