DAILY MAIL: Mortgage options

Looking to sell and go into rented to combat the mortgage rate issues won't be right for everyone - with rising rental costs we are still seeing some clients pay a lot more in rent than what their mortgage payment would be, this combined with a huge rental property shortage means compromises may have to be made in terms of area and property size. We have had a few clients that have increased their mortgage term to offer support when their new monthly payment is seeing a large increase - of course this will increase the total amount paid back to the lender, but there are options to decrease the term again in future if rates do fall. On a 200k mortgage on an average two year fixed the difference in five years is around a £90 a month difference which will help some but not all. However term extensions do get harder if you are an older borrower, as the lender will want to see the mortgage repaid ahead of retirement.

For mortgage account holders struggling with their mortgages, there is a myriad of things that need to be explored to make matters easier for them. Our first port of call is to analyse ALL non-mortgage expenditures and put these into priority order. This process will assist a suitably qualified adviser on what items are possible to re-negotiate terms on, for applicants in financial difficulties all unsecured debts need working on first before the all-important mortgage which is secured on their home. Once that process has been completed the options available for clients are: lengthening the term, where available using interest only, depending on the client's age and equity position converting to equity release, using any/all savings balances to reduce expensive mortgage balances. As an example on my desk at the moment a £171,700 mortgage 5-year fixed rate 4.80% over 25 years £983.84pm - 30 years £900.85pm, a 2-year fixed rate 5.10% over 25 years £1013.77pm - 30 years £932.24pm.

For those without reliable crystal balls, selling up now to hope to buy at a more affordable time would be a gamble more suited to the tables of Las Vegas and with similar odds of a successful outcome.

Having no doubt worked hard to obtain a home of their own, families and individuals would be better placed to look at their overall spending and seek advice on the potential flexible mortgage options that may be available to them. Tightening the belt on unnecessary optional spending would seem a far more sensible, safer and almost certainly less costly way to manage through turbulent times that may be faced now but which will pass.

Extending a mortgage term may be one feasible option and provide sufficient financial leeway to weather current storms but given that a 5 year increase in term of a 75% loan to value, 2 year fixed rate of 5.29% would equate to approx only £45 of a monthly saving for every £100k borrowed, advice around this area is of paramount importance.

Extending your mortgage term can be a good option as it buys you breathing space and can lower your repayments until you’re in a more stable position. It can be a temporary fix until you remortgage at a later date and perhaps shorten the term again. Be aware of early repayment charges which some lenders will charge if you decide to remortgage from your current deal onto a new mortgage.

Lengthening your term could be an option for older borrowers, particularly when viewed as a temporary fix. Another option could be to transfer to an interest-only mortgage for a while until things have settled down. There are plenty of specialist lenders, building societies and even private banks that will lend to older borrowers.

If you have savings, an offset mortgage could allow you to 'offset' these against your mortgage debt, meaning you'll only pay interest on the difference between the two. eg: a mortgage of £200,000, savings of £20,000 - interest is paid on £180,000 only.

I wouldn't suggest selling and moving into rented. Renting is unstable at the best of time and you won't really be saving much money on a monthly basis if any at all and it is 'dead money' you are just paying someone else's mortgage for them.

The potential for extending terms is something we are discussing with more and more customers at the moment. It is not an ideal situation but can help with affordability if you are finding things tough. This may not be feasible though for older borrowers especially if their term is already taking them close to retirement.

Rather than using savings to pay off a lump sum you could look at an 'offset' mortgage where your savings are placed into an account with the lender and the balance of the savings is used to reduce the interest you pay whilst also ensuring you still have access to the savings in an emergency.

Borrowers have access to a number of options when it come to reducing their mortgage payments, such as paying down a lump sum, extending the term or switching all or part of the mortgage to interest only. A good mortgage broker can advise on which options are suitable for your circumstances, both now and in the future. It may not be just one option but a combination that will help bring a borrowers monthly mortgage payments to a manageable level. Speaking to an adviser to work this out could be of huge benefit to remortgage borrowers.

If you're worried about paying your mortgage and your current lender can't help, selling up and downsizing or renting maybe your best option. Have a frank conversation with your estate agent and price just below current market values for similar properties. That's the best way to generate buyer interest and secure a fast sale.