Martin Lewis was abc on the small screen this week hosting a special mortgage edition of his Money Show Live on STV. The consumer champion explained how rising interest rates are set to impact mortgages for at least the next year - possibly longer - and warned that even homeowners currently on a low fixed-rate need to start planning ahead for when the deal comes to an end.
Martin told viewers: “There will be millions of you out there on a cheap fix and you’re thinking ‘this isn’t me right now’, it might be six months, it might be a year, or it might be 18 months, but you still need to listen. The first thing is, unless you’re on a very long fix, you need to prepare your budget now to see how much you will be paying once that rate goes up.”
He continued: “Get on to a mortgage calculator, put your details in and assume you’ll be paying at least 6 per cent, if it’s less great, but let’s assume 6 per cent or more.”
Martin explained that most people coming off a fixed-rate mortgage will pay “roughly £200 a month more” per £100,000 when that deal ends, but warned that the figure varies depending on your circumstances and could be “substantially more than that in some cases” and advised people to use one of the free mortgage calculators online to get an exact figure.
He also explained how ‘six months’ before a fix is due to end is the most critical time for everyone. He said: “Now the six months rule is really important. Six months before your fix ends, you need to check product transfers.
“Some 90 per cent of mortgage lenders have signed up for the new mortgage charter that starts in August which means that under regulatory rules, they have to offer product transfers to customers six months before their fix ends.”
He explained: “You could get one now at the current cheapest deal you can, you can have that sitting there in case rates go up before your fix ends, this will be ready to start when your current fix ends, but if cheaper deals become available later, you can usually ditch it penalty-free and go to a cheaper rate.”
Martin said there are usually no fees for locking one of these offers in, but advised anyone thinking about doing this to check they won’t have to pay any extra first.
The financial journalist also said the six-month timeline is when you should start curbing your spending if you think you’re going to have acceptance issues and it’s also the time to start minimising other credit applications.
Martin also met with Chancellor Jeremy Hunt before the show aired on Tuesday night to discuss the escalating mortgage crisis.
Mr Hunt defended the current course taken by the UK Government to tackle inflation, as rising interest rates are causing misery for mortgage holders.
Speaking to Martin, he said: “I don’t want people to be in the kind of pain I know people are feeling up and down the country at the moment.
“The question is, what do we do to get through this very difficult period. In the end, the only solution to the pain that families are feeling is to bring down inflation.”
He said that he recognised it was “tough” for mortgage holders, but said it was “actually tough for everyone” amid the cost of living crisis as he stressed the support the UK Government had introduced for those under the most pressure from rising interest rates.
You can watch The Martin Lewis Money show Live mortgage special on the STV Player.
To keep up to date with the latest cost of living news, join our Money Saving Scotland Facebook page here, follow us on Twitter @Record_Money, or subscribe to our newsletter which goes out Monday to Friday - sign up here.
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