Homeowners warned mortgage payments could rise by more than £1,000 in next year – but there’s a way to stop it

HOMEOWNERS face paying more than £1,000 extra a year in mortgage repayments, Rishi Sunak has warned.

The Chancellor told cabinet colleagues that interest rates are expected to soar to a crippling 2.5 per cent next year.

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It means homeowners without fixed rate mortgages will be shouldered with higher repayments.

Homeowners have been urged to lock into cheaper mortgages now before repayments go up.

Mr Sunak insisted the answer was not simply more government cash as it could backfire by fuelling inflation, The Times reports.

He told Mumsnet yesterday: “I want to be sure that I don’t make the problem worse. That’s why I can’t always do everything that people want, because it actually might make the situation worse, particularly with those on mortgages with rising interest rates.”

But he said it would be “silly” to provide Brits with more help with their sky-high energy bills now.

Instead he said the country should wait until the autumn, when prices are expected to rise AGAIN.

In his toughest warning to energy bosses yet, Mr Sunak did not rule out whacking them with a new tax.

He told Mumsnet: “If we don’t see that type of investment coming forward, and if the companies are not going to make those investments in our country and in our energy security, then of course, that’s something I would look at.

“Nothing is ever off the table. But right now, what I believe the right thing to do is to encourage those companies to invest so we have more energy security and support the economy.”

Mr Sunak is under massive pressure to cough up more cash to help families with the cost of living crisis.

Families are being clobbered by an eye-watering 54 per cent increase this month.

While inflation has rocketed to seven per cent – and could go higher.
But the Chancellor dismissed calls to give a new bailout to ease the bills pain.

He said: “Now I know people are anxious about this and wondering if they are going to go up even more, and I have always been clear from the beginning we will see what happens.

“And depending on what happens to bills then, of course, if we need to act and provide support for people, we will.

“But it would be silly to do that now or last month or the month before when we don’t know exactly what the situation in the autumn will be.

“So I’d say we’ll see where we are with that if we need to do more.”

How to get the best mortgage rate

Anyone on a fixed mortgage deal won’t see a change straight away in repayments if the Bank of England (BoE) puts up interest rates.

Homeowners could see higher rates when they come to the end of the term, either when shopping for a new fixed deal or reverting to the standard variable rate (SVR).

Homeowners currently on an SVR is likely to see a more immediate increase to their mortgage rate – and it could cost hundreds of pounds more.

Laura Suter, personal finance expert at AJ Bell previously told The Sun: “Anyone on a variable rate mortgage will see their interest rates go up – mortgage companies are very quick to pass on the base rate hike.”

The BoE monetary policy could announce a rate hike after it meets next week on May 5.

The central bank hiked the base rate to 0.75% in March and experts believe there will be further increases this year.

The base rate is used by banks to set interest rates for mortgages and savings.

Getting the best rate on your mortgage can depend on the rates available at the time, but there are several ways to land the best deal available for you.

If you’re on an SVR now fixed deals are likely to be cheaper, so it’s worth looking at the deals out there.

If you’re nearing the end of a fixed deal it’s also worth looking now as you can lock in current deals sometimes up to six months before your deal ends.

Leaving a fixed deal early will usually come with an early exit fee.

Usually the larger the deposit you have the lower the rate you can get.

If you’re remortgaging and your loan to value ratio has changed this could also give you access to better rates than before.

A change to your credit score or a better salary could also help you access better rates.

To find the best deal use a mortgage comparison tool to see what’s available.

You can also got to a mortgage broker who can compare for you, but you may have to pay for this service.

It could cost a couple of hundred pounds but it might save you thousands on you mortgage overall.

You’ll also need to factor in fees for the mortgage, though some have no fees at all, or you can add it on to the cost of the mortgage, but beware that means you’ll pay interest on it and so will cost more in the long term.

This post first appeared on thesun.co.uk