Is the mortgage market turbulence getting you down? Have you got a mortgage-related question you need answering? Email in and we’ll get one of our experts to reply. Nick Mendes, mortgage technical manager at John Charcol, has given his advice to a reader below. If you have a question for our experts, email us at money@inews.co.uk.
Question: My flat’s service charge has gone up by £100 a month recently for reasons that I’m very frustrated about. I’m currently on a five-year fix that ends later in the year, and at a higher rate I’m worried about the costs, considering the mortgage will go up too. What are my options and will I struggle to remortgage?
Answer: As your five-year fixed-rate mortgage draws to a close, it’s natural to feel anxious about potential cost increases, especially when also dealing with an unexpected increase in your service charge. Interest rates have likely risen since you first locked in your rate, which can put additional pressure on your monthly budget.
Everyone’s circumstances are different, which is why it’s important to speak with a mortgage broker who can ensure any advice is tailored to your needs. The good news is that there are various options to ensure you are in the best position when it comes to remortgaging and can keep your mortgage affordable despite higher rates.
First, it’s crucial to understand the reasons behind the service charge increase. Request a detailed breakdown from your property management company. If the increase seems unjustified, you may have grounds to challenge it through a leasehold advisory service.
As your fixed-rate mortgage term comes to an end, it’s important to start planning early for remortgaging. Begin by reviewing your financial situation and adjusting your budget to accommodate the higher service charge and the higher mortgage monthly commitment. This might involve cutting back on non-essential expenses or building a financial cushion to prepare for the potential increase in your mortgage payments.
Improving your credit score can also enhance your chances of securing a favorable remortgage deal. Ensure all your debts are paid on time and avoid taking on new credit commitments.
Begin researching remortgage options about six months before your current deal ends. This gives you plenty of time to explore different lenders and mortgage products, ensuring you find a competitive rate while also adjusting your expenditure. Starting early helps you avoid any last-minute rush and potential gaps in your mortgage coverage. It also puts you in the best position to change the mortgage terms should rates reduce between your application and the end of your fixed deal.
Using a mortgage broker can be a valuable resource and will likely save you time and money. Brokers have access to a wide range of mortgage products and can offer tailored advice based on your specific financial situation. They may also have access to exclusive deals not available directly to consumers.
A good broker can help you navigate the mortgage market and choose between fixed, variable, or tracker mortgages based on your financial plans and risk tolerance.
There are various ways to reduce costs, ranging from extending the mortgage term – though keep in mind the longer the term, the more interest you will pay – to part repayment and part interest-only options. Each choice comes with its risks, but with the right advice, you can ensure your mortgage remains affordable and tailored to your needs and circumstances.
While the prospect of higher mortgage payments can be stressful, proactive planning and professional advice can significantly ease the transition. By assessing your financial situation, improving your credit score, and exploring various mortgage products, you can secure a remortgage deal that fits your needs.
Don’t let the fear of higher mortgage payments overwhelm you. With careful planning and the right advice, you can find a remortgage solution that ensures your financial stability and peace of mind.
