Rising Mortgage Costs: How to Plan and Stay in Control

With mortgage rates soaring and household budgets squeezed ever tighter, you might be wondering - what does this mean for me?

In this blog we cover what you can do to protect yourself and some tips and tricks to help you manage the impact of rising mortgage payments.

Get in the know

Stay informed about what's going on with interest rates and the housing market. Keep an eye on price comparison websites to see what deals are available. Moneyfacts is a leading source of mortgage information.

Check your finances

Take a good look at your financial situation. Consider your income, expenses, and any debts you have. Understanding where you stand financially will help you figure out how rising mortgage payments might affect you.

Explore refinancing

If you have a variable-rate or adjustable-rate mortgage, or your fixed rate is coming to an end, rising interest rates will usually lead to higher monthly payments immediately. Talk to your existing lender about what fixed rates they can offer you. This can give you more stability and protect you from future rate hikes. But if stability isn't important to you, see if your lender offers a cheaper discounted variable rate deal, rather than staying on their standard variable rate. And if you have a low fixed rate coming to an end and your existing lender can't offer you a good deal, find out what deals other lenders are offering, whether fixed or variable.

Plan for higher payments

Whether or not you refinance your mortgage, you can still plan ahead for higher mortgage payments. Look at your bills and see where you can save some extra cash. Cutting back on unnecessary expenses now can help you adjust to the higher payments without feeling the pinch when it happens.

Tackle other debts

While you're planning for rising interest rates, it's also a good idea to focus on paying off other high-interest debts like credit cards or personal loans. By reducing these debts, you'll have more money available to handle higher mortgage payments. Check to see if Salary Finance could help you lower the cost of existing debts with a salary linked loan.

Consider restructuring your mortgage

Talk to your lender about how you might limit future increases or lower existing monthly mortgage payments by either converting some or all of your loan to an interest only basis temporarily, or extending the repayment term. In either case remember that this will increase the total cost of your mortgage in the long-term.

Pay a little extra

If you can, consider making extra payments towards your mortgage, whether that is a bit each month or a lump sum every now and then. Even if it's just a small amount, it can make a big difference in the long run. Talk to your lender to make sure there are no penalties for making extra payments. This calculator will help you work out the impact that overpayments will have.

Ask for help

If all this finance stuff feels overwhelming, don't hesitate to seek advice from a financial advisor or mortgage professional. They're experts who can guide you through the process and give you personalised advice based on your situation. Don't be afraid to ask for help when you need it. This website can help you find a qualified professional. 

Save for a rainy day

Building an emergency fund is like having a safety net. Try to save up at least three to six months' worth of living expenses. This way, if unexpected financial challenges come your way, you'll be prepared and won't have to worry about missing mortgage payments. Not sure where to start? Selling off unused items is a good starting point. You can also watch this video for more tips on how to create an emergency fund.

Stay positive and flexible

Lastly, remember to stay positive and be open to change. Keep an eye on interest rate trends and be ready to adjust your plans if needed. Change can be a bit scary, but it can also bring new opportunities and growth. Stay flexible and roll with the punches!

Facing rising interest rates on your mortgage might seem daunting, but with a little planning and the right strategies, you've got this! Stay informed, assess your finances, explore refinancing options, plan for higher payments, tackle debts, seek advice, build an emergency fund, and stay positive. You're in control, and you can navigate these changes. Good luck!