Fears surrounding mortgage affordability and remortgaging were some of the most commonly asked questions by consumers over the past few weeks, according to largemortgageloans.com.
The specialist mortgage adviser compiled a list of the most asked questions from their clients over the past few weeks and, unsurprisingly, they reveal the confusion and worry that most are experiencing about the turbulent months ahead.
Given recent market movements and the continued increase in the Bank of England Base Rate, the majority of clients are worried about their mortgage rate, whether the product they are on is the right one for their situation or should they switch, and what are the options if they can’t afford their mortgage payments.
Paul Welch, CEO and founder of largemortgageloans.com, advised: “Firstly, seek advice. Working with a mortgage broker, borrowers will be provided with the appropriate advice as to what actions can be taken.
“This might include remortgaging onto a different product.
“Secondly, a number of lenders will allow borrowers to take payment holidays, a concept which the Government insisted on during the pandemic, where borrowers can take up to 6 months off paying their mortgage.
“It’s important to note, that it’s not a holiday per-se; it’s deferring the payment until another month, meaning that interest will still be charged and added to the loan until the mortgage is paid off in full.”
The data collected by largemortgageloans found that are legitimate concerns amongst consumers over whether many will be able to afford their mortgage repayments next year, and by far one of the most urgent questions asked was: ‘What do I do if I can’t pay my mortgage?’
Additionally, whether borrowers should stay with their current mortgage product and lender, or change, was high up on the list of queries.
Questions including: ‘Should I remortgage now or wait?’ and ‘Is it worth remortgaging early?’ dominated queries.
Welch added: “Many clients have asked us about whether it’s worth remortgaging early, before the end of their existing mortgage term, for which there is no simple answer.
“As each mortgage deal is unique, remortgaging early could well save money, even taking into consideration payment of early redemption fees to exit their current deal.
“However, waiting until a fixed term is close to expiring may also be a better option, as it all depends on the existing deal versus the new deal that is offered.
“Factors to consider include the amount they want to borrow, the loan to value and their current income and personal circumstances.”
Questions surrounding mortgage rate confusion also proved to be popular, with many asking whether rates would continue to climb.
As well as this, interest in fixed rates skyrocketed, with many beginning to question whether their fixed rate deals were the most suitable for their needs.
Welch added; “Taking a longer-term product has its advantages and disadvantages. The main advantage is that it provides long-term stability, as it means borrowers will lock in the interest rate for five years, even if the Bank of England Base Rate increases.
“This is especially useful in times of economic uncertainty like now when interest rates are fluctuating.”
He concluded: “My main message to our clients has been try not to panic. We are not in a credit crunch like the one we experienced in 2007/08.
“The difference between then and now is that lenders want to lend, unlike back then when they stopped lending altogether because of the risk.
“Rates have risen because of the sudden increase in the cost of funding which lenders have to pay from the money markets and so there are solutions available.
“Help and guidance is available, and I would always advise seeking support from an experienced mortgage broker who can search the entire market of mortgage products to find the most suitable solution to meet their needs.”
