Consumers looking at ways to reduce mortgage repayments
August 21, 2008
A number of mortgage brokers have said that many consumers have been looking at ways to reduce their mortgage repayments by remortgaging to different deals that could work out cheaper on a monthly basis. Many homeowners have found it increasingly difficult to cope with their mortgage repayments as costs have become higher, and rising living costs, bills, petrol prices, and food costs have contributed to the difficulties that many homeowners have been facing recently.
Some mortgage brokers have said that many people are now looking to remortgage to a longer term mortgage, as they feel that by extending the mortgage term they can reduce the repayments that they have to make each month. By taking out a mortgage over thirty or thirty five years instead of the traditional twenty five years homeowners could save some money each month on their repayments, and with household finance the way that they are many are looking to do this.
Another way in which some people are trying to cut their repayments is by switching from a repayment mortgage to an interest only mortgage, which has lower repayments. One official said, however, that consumers needed to be careful about switching to interest only deals or extending the life of their mortgage. He said: ‘If you are facing higher mortgage repayment, extending the term of the mortgage will reduce them but will increase overall costs dramatically. It should be treated as more of a last resort.’
Another broker disagreed, stating: ‘The key thing is that a homeowner who needs to remortgage must feel they can afford the higher payments. If they cannot, it is much better to either extend their mortgage or switch to an interest-only deal. These are much better options than the alternative which is to struggle with their mortgage.’
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