As mortgage rates continue to rise, many people are left with unaffordable payments, and limited options to keep up.
Joanne in Gateshead was struggling with her mortgage payments before Chancellor Jeremy Hunt introduced three changes to help those who are struggling with bills.
Speaking on BBC Money Box, Joanne explained he is on an interest-only mortgage which she took out once she separated from her husband.
Her long-term plan was always to sell the house once her children had grown up and moved out.
However, over the last year, with mortgage rates continually rising, she is struggling to keep up with rising payments.
On June 1, 2022, her mortgage payments were £674.64, but now she is paying £1,182.86.
People are advised to talk to their bank immediately if they find themselves struggling to keep up with bills however Joanne has already done this.
She said: “The mortgage keeps going up and up and up. I spoke to my bank last year and I was told that there was nothing else. My only option was a payment holiday, which I grabbed because I was desperate at the time.
“That was for two months and that’s all they could give me. So, after the two months, my mortgage continued but I was also hit by another mortgage interest rate rise so I was paying even more, so it didn’t really get me out of the hole at all.”
Whilst on the repayment holiday, she thought she would be able to save this money to put towards the bills in the future but with the rising bills, this wasn’t possible.
She continued: “In reality, it doesn’t happen that way. I had Christmas, my car MOT, an increase in fuel bills and the increase in food.
“So, everything impacted. I did have some money to put away but just simply not enough.”
Mr Hunt unveiled new measures to help struggling mortgage holders following the base rate increase to five percent last week.
Three changes were announced to help mortgage holders with their inflated payments:
· Seeking advice won’t impact credit scores
· Homeowners can temporarily change their mortgage plans
· 12-month period before home repossession.
As Joanne is on an interest-only deal, extending her mortgage deal is not really helpful as she continues to pay only the interest rate.
“I’m again caught,” she added.
It should be noted that payment holidays will affect someone’s credit score which could make it more difficult to borrow in the future.
Sarah Coles, Head of Personal Finance at Hargreaves Lansdown explained people taking a payment holiday should think about how they will make up these payments later.
The missed payments will not be forgotten, they will have to be paid eventually and split up over time.
This means monthly payments could up or the mortgage will be extended.
