Martin Lewis warns of ‘nightmare’ year for renters and homeowners due to mortgage crunch – help you can get
MARTIN Lewis has warned of a "nightmare" year for renters and homeowners due to the
The MoneySavingExpert.com (MSE) founder spoke on ITV's Good Morning Britain earlier this week to share his concerns.
Homeowners and renters have been feeling the squeeze following rising mortgage rates and soaring rent costs.
The Bank of England (BoE) recently increased its base rate by 0.5 percentage points last week to 5%, leaving borrowers in crisis.
Martin said he's concerned about people borrowing money to pay off their mortgage because they're unable to keep up with increasing prices.
But borrowing could have a "detrimental impact"; on their credit score.
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He said: "We are in quite a vicious circle."
A new Mortgage Charter was passed last week to help give homeowners better support following rising rates.
The providers represent around 85% of the mortgage market giving new hope for millions.
From July 10, customers approaching the end of a fixed-rate deal will have the chance to lock in a deal up to six months ahead.
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However, experts remain uncertain over whether or not this measure will protect people from rises in the future.
Because of the Charter, Martin added that he doesn't think there will be a big rise in repossessions because banks will not repossess at least one year from the first missed payment, giving people a bit more time.
He also argued that the courts are "clogged up" and while that isn't good news, it means it'll take at least 18 months for a case like missed mortgage payments to go to court.
He added: "I think we'll see people voluntarily getting rid of their homes."
Elsewhere, Martin expressed concerns for renters whose bills are going up.
Landlords with buy-to-let properties might be feeling the pinch themselves and therefore raising rates.
Martin said that there are rules about how often a landlord can increase rent - each case will be different as it depends on each contract.
But if you are concerned, he suggested speaking to a professional or body.
He said: "There are many rent advisers out there. If you feel your rent is going up in an unfair way there are many different routes.
"If you feel your rent is being put up in a way that's unfair, seek advice."
What other mortgage help is available?
As soon as you think you will have a problem with your monthly mortgage repayment - whether you can’t pay anything, can't pay all of your monthly payment or can’t pay it on time - get in touch with your lender straight away.
They have certain schemes in place to help you if you're struggling.
You can ask your lender about the breathing space scheme if you're finding payments unaffordable.
Under the breathing space scheme, none of your debts will earn interest and no fees will be added for 60 days.
You'll be protected from debt collectors and bailiffs.
You may also be able to apply for a payment holiday - this is when you don't need to pay anything.
But interest and charges may continue to be added, and missed payments will need to be made up in the future.
Every company has a different policy so you'll need to get in touch to find out what support is available to you.
Support for mortgage interest or SMI helps those on Universal Credit - and other benefits - by giving them a low-interest loan.
The help goes towards mortgage payments or towards loans taken out to help repair any damage to the home.
SMI is a loan that you will need to repay with interest when you sell your home.
You'll get help paying the interest on up to £200,000 of your loan or mortgage.
But you'll only get up to £100,000 if you're getting Pension Credit.
The interest added to the loan can go up or down, but the rate will not change more than twice a year - the current rate is 3.03%.
Contact the office that pays your benefit to find out if you could get an SMI loan.
There are also several charities and services that offer free help and advice if you're worried about money.
It's always best to contact one of these services before thinking about debt consolidation or using a debt adviser who will likely charge you.
Citizens Advice is a free and impartial service which will help you come up with a plan to get on top of your debt including which payments to prioritise and how to reduce your living costs.
The organisation's website has a on many aspects of debt, but you can contact them directly by phone, online or in person for more personalised help.
StepChange is another free advice service offering support and guidance online or over the phone, and it's completely confidential.
You'll need to provide details of your debts, income and household spending to get a clear picture of where your money goes.
Where possible, their advisers will help you come up with a plan to repay all your debts but in a way that you can afford.
National Debtline is a charity run offering free and confidential advice to people in England, Wales and Scotland.
What should I do if I'm worried about high rent costs?
If you want to talk to someone about how to deal with your landlord, you can contact Shelter or Citizens Advice, or Housing Advice NI in Northern Ireland.
These organisations will also be able to talk to you about what entitlements you might be able to claim to help pay your rent if you’re on a low income.
Check if you can get help elsewhere to pay your rent.
If you’re on a low income or get benefits you might be able to get Housing Benefit (or housing costs payments through Universal Credit) for example.
There are also rules a landlord has to follow when they want to increase rent for regulated tenancies - this is called fair rent.
They can only increase the rent up to the maximum set by the Valuation Office Agency (VOA).
A landlord can ask the agency to review rent every two years, but if something has affected the value they can ask earlier.
Tenant's must be given a notice of increase and a landlord can charge the new rent from the date it's registered.
Landlords also need to complete a 'notice of increase' form and send it to their tenant.
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You can backdate your notice of rent increase for up to 4 weeks.
Do you have a money problem that needs sorting? Get in touch by emailing [email protected].
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