On The Martin Lewis Money Show tonight, the money-saving expert answered a viewer’s dilemma regarding her increasing mortgage payments.
Gemma wrote into the show explaining that she is worried as her mortgage payment is currently £400 a month but when she renews it, it will go up to £700 a month.
She said: “We just wouldn’t be able to live with the rest of the household bills along with two children. Are there any options for us out there?”
Mr Lewis explained that her situation was “very difficult, but common”.
Last October, the money-saving expert warned Britons of “a mortgage ticking time bomb,” as he predicted that fixed mortgage rates would shoot up.
More than 2.4million fixed-rate homeowner deals will expire between now and the end of 2024, according to figures from UK Finance, the banking industry trade body.
Those looking to remortgage are facing steep increases to what they may be paying now.
Fixed rates on two-year mortgages have risen above six percent today – while short-term interest rates on Government borrowing hit their highest level for more than a decade.
With the Bank of England expected to increase its key interest rate next week for the 13th time, Mr Lewis shared how Gemma, as well as other homeowners in similar situations, can try and prepare for the rises.
He said: “The first thing is to start putting money aside now to cover the extra payments if you possibly can.
“If you are generally unable to pay of course you will have to cut back on everything.
“The reason the Bank of England puts interest rates up is to fix inflation and to take money out of society.
“It is to deliberately squeeze the cost of borrowing, so you have less money to spend on other things.
“It is not an accident. It’s a deliberate policy to starve cash out of the economy by making borrowing cost more and mortgage holders pay the brunt of it. So, it’s difficult to fix when that is why it is being done in reality.”
He suggested that people who are really struggling should go straight to their lender and talk to them as soon as possible.
They may be able to offer a short-term repayment holiday, but it will affect one’s credit score.
They may also be able to extend their term to lower their repayments or pay the interest only for a short period.
Mr Lewis added: “Talk to them about forbearance measures – this can get you over the hump. But these can affect you in the long term.
“Cutting back on everything else and muddling through is an option but talk to a mortgage broker just to see what deals are available.”