“Since I put my flat up for sale my mortgage payments have gone up by £300 a month – what can I do?”

Helen Hambly's fixed-rate deal ended last year, and since she's selling her flat, she hasn't bought a new one (Matt Writtle)

Helen Hambly’s fixed-rate deal ended last year, and since she’s selling her flat, she hasn’t bought a new one (Matt Writtle)

Helen Hambly, 36, works for a media agency and is trying to sell her studio flat in Blackheath so she can live with her partner and his two children.

“I made the apartment myself with a new bathroom, kitchen and pull-out bed to maximize the space. It’s two minutes from Greenwich Park, but with flats closed, studios are harder to sell.”

Helen had two buyers and the flat has been on the market for over a year, so she lowered the price by £10,000 to £240,000.

“I feel like I’ve followed all the rules and saved up to get on the real estate ladder and now I’ve come to sell and I can’t.”

In addition to preventing Helen from carrying out her plans, this delay costs her a significant amount of money. Her low-fixed-rate mortgage ended a year ago, and when she sold, she didn’t sign a new contract, but switched to the lender’s standard floating rate.

Since the Mini Budget, its interest rate has nearly tripled, boosting monthly mortgage payments by around £300. “With bills, I also spend £1,500 a month when I could have saved up for a new house. I would like to know if there is anything I can do to reduce my monthly mortgage payments while I am still trying to sell. “

Details

  • Price paid for a studio in August 2017: £216,500

  • Previous Mortgage Rate: 2.1%

  • Previous monthly repayments: £775

  • Current mortgage rate: 6.25%

  • Currently monthly repayments: over £1,000

  • Mortgage balance: £142,000

Advice

Simon Gammon, managing partner at Knight Frank Finance, says:

Firstly, I would recommend Helen to check with her current lender to see what they offer for a floating rate product. This will be cheaper than the lender’s standard floating rate and there will be no penalty, so when Helen finds a buyer, she can sell for free. However, Helena should be careful to check whether the lender charges a setup fee for accepting a new product.

If Helen’s existing lender doesn’t have a suitable option, she may consider remortgaging. Some lenders offer free remortgage and again I recommend switching to a tracking mortgage with no early repayment fees. Helen’s savings will depend on how long it takes to sell, but she will see a decrease in her monthly expenses. This decline will happen much sooner if Helen stays with her current lender, and I would recommend that she act now rather than wait for a buyer.

Felicity Holloway, Head of Mortgages at Moneybox:

Helen’s situation is not unusual and may depend on the type of property and its location. Trying to match the sale of a property to the end of a mortgage contract is difficult and can lead to costly months at the bank’s standard floating rate.

Ideally, at this stage, Helen would look for a buyer who is not in the chain to reduce the risk of stopping further sales. She has mortgage options: first, she could renegotiate the current rate. Some fixed-rate mortgages have an Early Repayment Fee (ERC) that Helen would have to pay if she took out a new fixed-rate mortgage and then sold the apartment.

However, more flexible non-ERC products are available that can offer Helen a lower rate, lowering your monthly expenses. Overall, rates are now higher than when she agreed to her previous deal at 2.1 percent. However, I would advise her to discuss her situation with a mortgage broker who can assess the entire market and recommend an alternative to her.

Before taking any action based on the information contained in this article, you should seek the independent advice of a qualified professional

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