How Much Will My Mortgage Go Up?

Estimated reading time 6 minutes

First let’s understand the basics, of what a mortgage is, in its simplest form, it is a loan that is taken out to buy a property or a piece of land. The key thing to remember is that it’s actually secured against your home, so until you have repaid the loan the lender has first rights on your property. If you fail to keep up with your repayments, the lender can in the worst-case scenario repossess your home and sell it to cover the loan and debt you owe.

In the current economic environment where interest rates have been going up it is understandable for homeowners to worry about how much their mortgage repayments can go up by and whether their mortgage is still affordable.

The number of homeowners coming off of fixed rate mortgages in 2024 is 1.6million, and the typical family housing costs are seen increasing by about £1,800 according to Resolution Foundation thinktank.

If you are one of these households you will no-doubt be concerned about coming off of your low fixed rate mortgage and taking out a new more expensive mortgage but you are not alone. About 55% of UK mortgagees have moved on to higher interest rates since rates started to rise in 2021 and the government on 26 June 2023 announced a new Mortgage Charter to help those facing financial difficulties caused by rising interest rates as well as the higher cost of living.

Why do mortgages go up?

Mortgage payments can increase for several reasons the most common being a change in interest rates. Let’s look at Standard Variable Mortgage, Tracker Mortgage and Fixed-rate Mortgage to see what makes them move and by how much the mortgage increases by.

Standard Variable mortgage

If you have a variable mortgage the rate of interest you pay on your mortgage can go up and down based on the Bank of England’s base rate and in certain market conditions your rate may go up or down without a Bank of England move as the mortgage company may decide to move their rates due to other market dynamics.

Tracker mortgage

If you have a tracker mortgage the rate of interest you pay on your mortgage is normally linked to the Bank of England’s base rate. A change in base rates will affect the rate of interest you have to pay on your mortgage and therefore will directly impact the amount you have to repay each month.

Fixed rate mortgage

If you have a fixed rate mortgage the rate of interest you pay on your loan stays the same for the set period of your loan.  This mean for the time that you have a fixed rate mortgage your payments stay the same regardless of what is happening with interest rates.  However, once the fixed period ends, you will usually switch to the lender’s standard variable rate (SVR), which is often higher than the rate where you fixed at.

Fixed rate mortgage coming to end? 

Don’t wait for your fixed rate mortgage to end, 6 months before you come to the end of your fixed rate mortgage you can start looking around for a new mortgage.  Lenders generally allow you to secure a rate up to six months before your mortgage deal expires, which is why it is a good idea to start 6 months before yours ends. It is important to know that you don’t have to stay with your current lender so do check out what mortgages are available with other lenders and choose the option that best suits you and your financial requirements. 

Before taking out a new mortgage you need to decide whether your plan is to stay in your current house or to sell your property.  It is important to make this decision before signing up to a new mortgage because some mortgages come with early repayment charges or exit fees. These penalties can be applied if you end or change your mortgage before the end of the agreed term. Therefore, if you want to avoid potential extra costs associated with exiting your mortgage early it’s a good idea to know what your long-term housing plan looks like.

It is always good to seek advice if you are unsure about what to do speak to your lender and get advice from a mortgage broker who will also be able to help find you the best new deal.

If you do nothing, when your fixed-rate deal ends, you will automatically move to your lenders standard variable rate and this could very likely result in a very high move up in your monthly payments.

Remember the transition from a predictable fixed amount to a potentially higher, variable rate can have a significant impact on your financial situation.

What can I do when mortgage payments are going up?

Adjusting to higher mortgage payments requires careful financial planning. Start by reviewing your monthly income and expenses. See where you can cut back on non-essential spending to accommodate the higher mortgage cost and take the necessary action needed so that you can make your payments. A number of lenders have affordability calculators which are definitely worth a go too.

What if I can’t afford a higher mortgage?

First, communicate with your lender. They may offer solutions like extending your mortgage term or switching to an interest-only mortgage temporarily. If these options don’t work and you’re facing financial strain, selling your home could be a practical choice.

Are you struggling with mortgage payments?

If you have found yourself in the unfortunate position whereby continuing with your mortgage is no longer a feasible option contact Gaffsy. We understand that when you’re facing the prospect of higher mortgage payments and want to sell your property that time is of the essence. As genuine cash house buyers we do not need to get surveys or wait for mortgage approval we can make you a free cash offer today and your property can be sold in as little as 7 days. There are no costs and Gaffsy covers your legal fees providing you with a quick, hassle-free way to sell your property.  

Do you need to settle your mortgage quickly to avoid financial distress or repossession?

Gaffsy can step in and help alleviate this stressful situation. We buy any house, in any condition and will do so quickly.  We can help you avoid that worry and struggle to meet you monthly mortgage payments, ultimately preventing the devastating outcome of you losing your home. For further information on how to stop house repossession please check out our guide.

How do I navigate mortgage increases?

Rising mortgage payments can be challenging, but with the right strategy and support, they can be managed. Whether it’s through careful financial planning, renegotiating with your lender, or considering a property sale through Gaffsy, there are ways to maintain financial stability. If you do what to sell your property contact Gaffsy today and they will make a same day cash offer for your property.

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