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Why you should contact your lender if you’re concerned about your mortgage repayments

Posted on by Pranco
Why you should contact your lender if you’re concerned about your mortgage repayments

Four in ten mortgage holders say they have worried about their ability to meet their monthly repayments in the past two years.

New Which? Research has shown the impact of high interest rates on homeowners. The average interest rate peaked at 6.85% in the summer of 2023, compared to 3.95% a year earlier.

Despite banks offering a range of support options to people struggling to make their repayments, less than a quarter of those surveyed have asked their provider for help.

Read on to find out what action homeowners take if they’re struggling to pay their mortgage, and for advice on the support options available to help you stay on track.

Why did mortgage rates rise?

Mortgage holders have faced challenging economic conditions in recent years.

Inflation soared in 2022, resulting in a series of increases in inflation Bank of England base rate and mortgages are becoming much more expensive.

The inflation rate is now back below the Bank of England’s target of 2%, and the base rate is expected to fall gradually over the coming year; However, home loans are still more expensive than before.

Homeowners about to reach the end of a five-year lease are facing the biggest increases. In November 2019, mortgage rates averaged just 2.49%, less than half the current rate of 5.39%.

Homeowners make sacrifices to pay the repayments

In August and September we asked 3,556 mortgage holders whether they had worried about paying their mortgage in the past two years.

Overall, 39% of respondents said they were concerned, while 9% of them said they were very concerned.

We asked them what action they took. Most often, concerned homeowners reduced their daily expenses (58%) and cut back on their leisure activities (56%).

A smaller proportion (16%) borrowed money from friends or relatives.

Surprisingly, less than a quarter (23%) asked their lender for support.

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How the mortgage charter protects borrowers

In June 2023, the government responded to rising mortgage rates by introducing measures to standardize support for struggling homeowners.

Previously, the level of support available varied depending on the lender’s individual policies.

The Mortgage Statute was drawn up to expand customer support.

There are 49 lenders that have signed up, representing around 90% of the mortgage market, according to the Financial Conduct Authority (FCA).

FCA data shows that 1.4 million mortgages have benefited from one or more of the options set out in the charter.

Approximately 132,000 mortgage holders have been able to temporarily reduce their monthly payments thanks to the rules.

Support options offered by mortgage providers

If you are struggling to pay your mortgage, it is important to contact your lender as soon as possible.

Don’t be shy about admitting that you are concerned because your lender will be happy to help you find a solution.

You also don’t have to worry about causing damage to your credit scorebecause discussing your situation and exploring options will not affect this.

Lenders offer a range of options to help customers in difficulty. These include:

  • a mortgage payment holiday
  • a temporary switch to interest-only payments
  • extending the mortgage term to reduce your monthly costs.

If you have missed mortgage payments, you may be able to receive government assistance.

The help available depends on whether you live in England, Scotland, Wales or Northern Ireland and whether you receive government benefits.

MORTGAGE LENDER RATINGS

How mortgage lenders score in terms of customer service

Our research found that 73% of people who contacted their lender were satisfied with the support offered, while 14% said they were not satisfied.

This shows how important it is to choose a lender that offers good customer service, and not just the one that offers the cheapest deal.

As part of our annual mortgage lender reviews, we rank banks and building societies on various elements of customer service, before delivering our Which? Recommended providers.

Where you can get free debt advice

If you’re struggling with debt, it can be helpful to seek independent advice about your options.

Free advice is available from a number of organisations, including the following:

More information: free contact lens for debt advice

Which one? Limited is registered in England and Wales at 2 Marylebone Road, London NW1 4DF, company number 00677665 and is an Introducer Appointed Representative (FRN 610689) of the following:

1. Inspop.com Ltd for the introduction of non-investment car, home, travel and pet insurance, which is authorized and regulated by the Financial Conduct Authority (FCA) to provide advice and non-investment car, home, travel – and pet insurance insurance products to be arranged (FRN310635). Inspop.com Ltd is authorized and regulated by the Financial Conduct Authority (FCA) to provide advice and arranging non-investment car, home, travel and pet insurance products (FRN310635) and is registered in England and Wales with Greyfriars House, Greyfriars Road, Cardiff, South Wales, CF10 3AL, company number 03857130. Confused.com is a trading name of Inspop.com Ltd.

2. LifeSearch Partners Limited (FRN656479), for the launch of Pure Protection Contracts and Private Health Insurance, which are authorized and regulated by the FCA to provide advice and arrange Pure Protection Contracts and Private Health Insurance Contracts. LifeSearch Partners Ltd is registered in England and Wales at 3000a Parkway, Whiteley, Hampshire, PO15 7FX, company number 03412386.

3. HUB Financial Solutions, to introduce equity release advice, which are authorized and regulated by the Financial Conduct Authority (‘FCA’) to provide advice and guidance on financial products for those in or nearing retirement retire (FCA Firm Reference Number: 455713). HUB Financial Solutions is registered in England and Wales under Enterprise House, Bancroft Road, Reigate, Surrey RH12 7RP, company number 05125701.

4. Alan Boswell Insurance Brokers Ltd (FRN 301), for the introduction of non-investment insurance for landlords, authorized and regulated by the Financial Conduct Authority to provide advice and underwrite insurance contracts. Alan Boswell Insurance Brokers Ltd is registered in England at Prospect House, Rouen Rd, Norwich NR1 1RE, company number 02591252.

Other financial services:

Mortgage service provided by London & Country Mortgages (L&C), Unit 26 (2.06), Newark Works, 2 Foundry Lane, Bath BA2 3GZ. London & Country are authorized and regulated by the Financial Conduct Authority (registration number: 143002). The FCA does not regulate most Buy to Let mortgages. If you do not make your mortgage repayments, your home or real estate may be seized.

We do not make, and do not pursue, recommendations or personalized advice on financial products or services that are regulated by the FCA as we are not regulated or authorized by the FCA to advise you in this way. However, in some cases we have included links to regulated brands or providers with whom we have a commercial relationship and, if you choose, you can purchase a product from our commercial partners.

If you purchase a product through our link, we receive a commission to help fund our non-profit mission and our campaigns work as a champion for British consumers. Please note that a link alone does not constitute an endorsement by Which? entails.