Debt is on the rise in the UK, and nearly everyone is affected by it. Every four minutes, the level of debt in the UK increases by £1 million, and every day, the average debt per household increases £13. In addition, inflation is at 3 per cent and interest rates are unstable. There have been multiple interest rate increases in the past months, and this has added a significant amount to average mortgage payments. At the rate debt is rising, and considering the other uncertainty around your finances, it is important to look for any means possible to lower your monthly outgoings.
If you decide to take out a mortgage during this financially tumultuous time, it is important to look around for a cheap mortgage deal. Often you can find lenders that offer significantly decreased interest rates when compared to other lenders. While you're looking around for lower rates, also consider lenders with reduced fees, as well as lenders who offer payment flexibility. This will help in case interest rates continue to rise in the future. It's imperative that you carefully consider the terms and conditions of any mortgage before you decide to go for it.
According to the Council of Mortgage Lenders (CML), 14,000 homes have been repossessed by mortgage lenders in the first half of 2007. This is a 30 per cent increase over the past 12 months. Many of these repossessions may have been avoided had the borrowers sought help at the first time of trouble.
If you're already locked into a mortgage, and if you are beginning to feel any financial strain when it comes to making your payments, speak with your lender straight away. Many people hold off speaking to their lenders because they think they'll find a way to resolve their problem. However, often times, these people land themselves in even more trouble than they would have been in if they had sought advice sooner.
Once you speak with your lender, you may decide to remortgage. If this is the case, start looking around for a lower rate right away. While you're looking for the best remortgage for you, make your mortgage payments your number one priority. You will be able to find better remortgage deals if you've got a spotless repayment record.
In addition to finding a lower rate remortgage, consider extending the term of your loan. This way, the amount you still owe will be stretched over more months, so the sum you pay each month will decrease, making your payments more manageable and your monthly outgoings less.
There is a light at the end of the tunnel, so to speak. Interest rates seem to have stabilised, and many experts predict that the Bank of England will follow the example of the US Federal Reserve and cut interest rates in the coming months. This time of stabilised interest rates is a perfect time to get your finances in order. Use this time to search for a lower rate remortgage or to speak with your lender about the repayment options that are available to you.
If it happens that interest rates do in fact decrease, consider pretending that they haven't, and put the difference between what you've been paying and the amount you'll pay under a lower interest rate into a high interest savings account. If you do this, you will build up a cushion to fall back on in case interest rates begin rising again in the future. It always helps to plan ahead.