Fixed-rate mortgage holders ‘must plan to stay debt free’
While fixed-rate mortgages may offer some respite from recent interest rate increases, borrowers must plan to remain debt free, it has been warned.
The Council of Mortgage Lenders (CML) states that a long-term approach to managing mortgage debt could be as crucial as the original decision of which package to seek.
Research conducted by the CML found that 89 per cent of first-time buyers obtained a fixed-rate mortgage in May, a one per cent increase since April.
Director general Michael Coogan states: “Taking out short-term fixed-rate mortgages may provide some reassurance, but eventually the loans will revert to a variable rate and the risk of a payment shock is real.
“Planning ahead for higher payments is as important as the initial decision to shelter from the risk of higher borrowing costs.”
He adds that consumers facing difficulty with their repayments should consult their lender at the earliest possible opportunity.
The CML recently suggested that an offset mortgage could allow Britons with savings to minimise the impact of the rate rises.
However, those who do not have savings could benefit from assistance in order to become debt free.
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