IF you're a home-owner, chances are your biggest monthly outgoing is your mortgage - and new research suggests a significant number are worried about being able to afford making their payments, as the cost of living rises.
Although many home-owners are on fixed-rate mortgage deals, giving them certainty over their regular payments, pressure may also be coming from elsewhere, as other household bills - such as food and fuel - increase.
In fact, if everyday prices continue to rise, over half (52 per cent) of UK home-owners surveyed by Opinium believe they may struggle to afford their mortgage.
Over a third (36 per cent) would consider paying to exit their mortgage deal early, with the average home-owner prepared to fork out £2,310 to do so, if it meant fixing into a better rate for longer. Two in five (38 per cent) say they'll need to cut back elsewhere to be able to keep up payments, according to Opinium.
Across the UK, around 1.3 million customers are set to reach the end of their fixed-rate deals this year and, unless they re-mortgage, will move on to their lender's standard variable rate (SVR), according to trade association UK Finance - and some may well find their new rate is more expensive than their previous deal.
Re-mortgaging may be a prudent decision for some, as average SVRs have recently increased to a 13-year high, according to Moneyfacts.co.uk. The average SVR in June was 4.91 per cent - the highest Moneyfacts has recorded since February 2009.
Even if they do take out a new deal, UK Finance estimates home-owners coming off fixed-rate mortgages this year and shifting to a new product can typically expect to see their disposable incomes shrink by 7 per cent - due to both the rising rates generally and the increase in the cost of living.
"When customers are maturing on their two-year fixes and their five-year fixes now, the vast majority of customers will pay more money on their new rate," says Graham Sellar, head of business development - mortgages at Santander UK.
But home-owners re-mortgaging may find they have some wriggle room - Sellar adds: "You can do things to change the amount of money per month you have to pay.
"If the customer wants to maintain their payments at the same level, they could re-mortgage and extend their term and then keep the monthly amount the same."
Those who've managed to hold onto savings built up during lockdown may want to make some overpayments to their mortgage, to reduce the balance and perhaps keep monthly payments down.
Equally, people considering a fixed-rate mortgage should also consider the length of time they want to fix in for, Sellar adds: "Because if you are worried about even more increases coming then you can lock in for a period of time. It's about making sure you do the right thing for you. There isn't a right or wrong answer."
There are also steps home-owners can take to get themselves in a good position before their existing mortgage matures. "The first thing they should do is find out the date their rate matures," says Sellar.
Many lenders will allow people to apply for a new rate several months in advance - meaning they would not need to break out of their existing deal in order to secure a new one. Some borrowers may be able to secure a new rate now, even if their current mortgage deal doesn't mature until much later this year.
Completion times can vary, but some people may find they can lock into a new rate around four to six months beforehand. "If you don't (know when your mortgage ends) put a reminder on your phone," suggests Sellar.
Some people may also be considering taking money from the property when they re-mortgage. Sellar says that while many people have seen the value of their home appreciate recently, home-owners should "tread with caution" if they are thinking about doing this - and watch out for being over-optimistic about the value of your home.
As Sellar notes: "We tend to find that 30-40 per cent of people think their house is worth more than it actually is."
For those who are worried about making their mortgage payments, speaking to your lender is key.
"The worst thing you can do is not to speak to your lender. If you're having trouble, it's worth giving the mortgage lender a ring," says Sellar.
"If customers are speaking to us, we can look for ways to amend their payments and change things (maybe extend the mortgage term or use some capital to pay the mortgage off). Don't ignore problems. Lenders are there to help keep you in your home."
