Some homeowners could face 40% hikes in repayments
September 24, 2008
A worrying report has shown how some homeowners in the UK who are due to come to the end of special cheap mortgage deals, such as cheap fixed rate mortgages, could face hikes of up to 40% when it comes to their mortgage repayments, which could mean an increase of hundreds of pounds a month for some. Many people are due to come to the end of special mortgage terms, and this means that they will either have to look for an affordable alternative or they will have to switch to the lender’s standard variable rate, which can be very high.
With the mortgage meltdown still ongoing many people coming off these mortgage deals could find that they cannot find a suitable alternative or cannot afford to switch to another product. It is thought that around a million homeowners are set to see their repayments rise by up to 40% and amongst those most likely to be affected are those with little or no equity in their homes, such as people that took out 100% mortgages, and more recent property purchasers.
One industry official said that the cost of switching and availability of mortgage deals would both cause problems, stating: ‘In the old days, competitive mortgage rates were typically available to anybody with more than five% equity. Now to get the best rates you need 25% or more.’
Another official suggested that it may be more feasible for homeowners to simply switch to the lender’s SVR despite the rise in repayments, stating: ‘The advantage of the SVR is that there is no fee to pay - and with some fixed and discounted deals coming with fees of about £1,000 or more, it is easy to see why some borrowers prefer their lender’s SVR for now. The idea is that once a competitive fix or discount becomes available the borrower can then move on to that without paying a penalty or having to give any notice.’
- Increase in mortgage interest rates despite base rate cut The nation's biggest building society, Nationwide, announced earlier this week that for the second time in the space of a week it was increasing the interest rate on some of its mortgage products. This comes
- Nationwide mortgage customers could face hikes of £1300 a year Many Nationwide mortgage customers could be facing mortgage repayment hikes equating to over £1300 a year as a result of the recent mortgage interest rate hike applied by the building society. Nationwide ha recently announced
- Interest rate cuts may not be passed on right away says Darling Many homeowners in the UK breathed a sigh of relief at the end of last year, when the base rate fell for the first time in over two years, following a series of five interest
- Cost of having home improvements on the up The number of people that are deciding to have home improvement carried out is on the rise, and this is because many homeowners are now finding that it has become far more difficult and expensive
- Homeowner that bought properties within last four years could face capital loss According to a recent report homeowners that purchased their properties under four years ago are worst placed to face capital losses from the effects of the ongoing house price falls, as many will have paid
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