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Mortgage payments are a regular form of expenditure for millions of people right across the country. Some households are even forced to confront the idea of ‘mortgage poverty’ – where most of a home’s income goes directly to paying off the lengthy loan. But in most cases, to secure and keep a home, these regular payments are a necessity.
Many households are likely to have been financially affected by COVID-19, which could have a bearing on the amount they can afford to pay.
And with mortgage payment holidays coming to a gradual end, people will be looking to reduce their costs in whatever way possible.
Thankfully, though, there are a number of options worth considering.
With interest rates at a record low following the Bank of England’s decision in March, overpaying now could be a good idea to avoid financial hurt when interest rates eventually increase.
However, with this option, timing is key, as a switch can often take place through remortgaging – done when an existing deal comes to a close.
A third point of consideration to bear in mind is whether a person is on a standard variable rate (SVR).
The SVR is a type of mortgage rate which many people automatically lapse onto when they finish their fixed or tracker deal.
According to the online mortgage broker Trussle, people sitting on the SVR deal usually viewed as unfavourable, are wasting an average of £4,500 a year.
And of course, mortgage payment holidays are still available to apply for, until the end of October.
The Financial Conduct Authority (FCA) has stated mortgage payment holidays will continue until October 31, 2020.
This means applying for a payment freeze at this point could mean a break from payments until early 2021.
But people are urged to think carefully about this option, as it is likely to mean higher payments in the long run once the freeze comes to an end.
Help, however, is at hand for those who are continuing to struggle meeting their payments.
This is because the FCA has told mortgage providers they must offer tailored assistance to those financially affected by the COVID-19 crisis.