What to do about increasing mortgage interest rates

With mortgage interest rates now at a ten-year high, Hugh Breen of HB Mortgage Solutions has shared the common questions he’s answering when it comes to reducing monthly payments.

Is extending your mortgage term a good idea?

Bringing your monthly repayments down might seem like a great idea. After all, no-one likes paying more than they have to! However, it’s not all roses. Extending your mortgage term whilst reducing your payments for now, will increase the amount of interest you have to pay overall.

So, is extending your mortgage really a good idea?

Ultimately, it all comes down to how much you need those lower monthly repayments. If you’re struggling with the amount you’re having to pay each month, extending your mortgage term will probably be worth it.

However, if you’re managing just fine as it is, you might decide you’d rather pay off your mortgage quicker to take advantage of those lower overall interest charges (and to enjoy mortgage-free life sooner!).

Can I switch my mortgage to interest only?

In short. Yes. Most mortgage lenders will be open to you changing your mortgage to interest only given the current climate. However, each lender has its own criteria for doing so. You will need to know what you will do in the future to repay the loan - i.e. switch back at some point in the future to a repayment mortgage or look at other ways of repaying e.g. sale of property and downsizing, using savings and/or, pension lump sums.