Mortgage payments quite frequently involve households using a large proportion of their income to go towards meeting their costs. This is an instance commonly known as mortgage poverty, where a household spends most of their income on progressing towards homeownership. Mortgage poverty, or being “house poor”, is a circumstance faced by thousands, but there are ways to reevaluate payments.
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Sadly, the issue of mortgage poverty has only been exacerbated by the lockdown crisis, with many needing more help to get back on their feet.
Express.co.uk spoke to Michelle Stevens, Mortgage Specialist at finder.com about mortgages.
She provided insight into the issue of mortgage poverty, which has unfortunately become prevalent across the UK.
Ms Stevens also explained how Britons can best keep on top of their payments, or reverse a mortgage poverty situation.
She remarked: “In terms of homeowners staying on top of their mortgage payments, it may be a case of budgeting really carefully at this uncertain time.
“This will be so you know you have enough funds to make those crucial mortgage repayments every month.
“There are a range of financial apps out there to help you with your budgeting, and many bank accounts now also come with features that allow you to track your spending, or divert some of your income into savings pots.”
However, Ms Stevens also drew attention to the difficult financial circumstances many people are currently facing.
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In many cases, the COVID-19 crisis has placed more financial strain on households, leaving them struggling to meet costs and pay bills.
Mortgages, then, will perhaps be particularly affected by this, as they are often the most significant bill people have to meet each month.
For those who are struggling financially, there are options at hand.
Mortgage payment holidays have become popular with millions of Britons who seek to freeze their commitments for a number of months to help them manage their money.
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However, Britons have been warned about being too quick to take this option up, without considering its implications.
This is because interest will continue to accrue on a mortgage during the break, potentially creating a higher bill in the long run.
Ms Stevens commented on the options at hand for borrowers, saying: “Reducing your mortgage payments is something that has to be agreed with your lender.
“That could take the form of a full or partial mortgage holiday, or you could agree to extend the term of your mortgage.
“This option would see you pay more over the lifetime of your mortgage, but it would have the effect of reducing your monthly payments.”
For those who are afraid of failing to meet their mortgage payments on time, or having their house repossessed, there is help at hand.
Britons are encouraged first to speak to their lender about their individual circumstances to see what options are on the table.
Next they should attempt to seek debt help, by looking at their debts to try to manage and prioritise them.
Various charities and organisations such as Citizens Advice or StepChange can also offer their input.
And finally, paying at least something, after an agreement with a lender, could help while borrowers’ circumstances improve.
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