Mortgage warning: Woman fears ‘losing it all’ as payments rise | Personal finance | Finance

SMI loans are payments that help homeowners unable to work cover the cost of their loans. For some people, the difficulty in coping with payments has raised fears of default and repossession. Support for homeowners unable to work does not increase as interest rates rise, forcing a woman to petition the government to cut the loan entirely as she risks ‘losing everything’.

In 2018, SMI moved from a payment to a loan, which charges interest at 1.4%, up from 0.8% earlier this year.

The Bank of England announced this week that the base rate has been cut from 1.75% to 2.25%. Measures to help homeowners on benefits have failed to match the Bank of England’s seven consecutive interest rate increases since the end of last year.

Patricia Every (name changed to remain anonymous), 54, has a £107,000 mortgage on a follow-on contract. She is currently receiving ESA disability benefits, and a standard PIP, and most recently an interest bearing loan for mortgage interest support (SMI) as she is unable to work

His mortgage rate nearly doubled from 2.26% to 4.5%, while the bank rate rose to 2.25% yesterday, only making his bills more unaffordable.

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She said: ‘I contacted my lender a few months ago but due to some arrears they would not allow me to change my mortgage product until all arrears had been cleared. At the time, their rates were 1.45%.

“The cost of living crisis has affected me immensely, I fear not only for myself but also for others in my position.

“Being disabled, I struggle every day to survive, life is very stressful, and now all this additional financial pressure is exacerbating my disease.

“Not only have I had to reduce my food and other essentials, but I have also had to reduce my energy consumption, because the coming winter will not be good for my health, because the cold affects my joints and cause so much pain.

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“I also stopped my alternative medication as I can’t afford it. Needless to say, I’m very anxious and getting depressed.

Since the change in 2018, Ms Every has racked up £11,500 in debt.

Andrew Wishart, of Capital Economics, a research firm, said: “We now expect the unemployment rate to rise from 3.8% to over 5%, which will increase foreclosures, although they should remain well in below the levels reached in the house price crashes of the early 1990s and 2008.” Capital Economics predicts a 7% decline in house prices over the next two years.

Across the mortgage market, the average two-year fixed-rate agreement is now 4.09%, its highest level since 2014, according to the TotallyMoney app and the MoneyComms website.

Sarah Olney, Liberal Democrat MP and Treasury Spokesperson, said: ‘The Government must introduce an emergency mortgage support fund.

She said: “We will see people losing their homes, and it will happen quite quickly.

“There is a threat to the housing market and those who have coalesced to buy at the top of the market are the ones who will be hit the hardest.”

She continued: “It has been widely reported that the Bank of England’s base rate will rise further, with some predicting 4% and even more, there could be massive homelessness on the horizon, many of which are the most vulnerable people in society.

Ms Every is calling on the Government to carry out an urgent review of the SMI as the current support rate is just 2.09% which does not cover the interest many claimants have on their mortgages, with the average SMI being around £80-200 per month.

She said: “The loan must be canceled in its entirety. If they choose to do nothing, many people like me will end up being recaptured and ending up in emergency accommodation, costing the system up to £30,000.

“And then be eligible to claim housing allowance of around £500 or more per month, and any additional costs for other services. And let’s not forget, there are very few HLM stocks like this, where are we all going?

“I don’t choose to be in this position, I hate it. I worked for many years. I paid taxes, had a good career and was very active. Now I’m trapped in my body and I can’t do anything about it.

“If I lose my home, I will lose my safe place and the support network that I currently have around me. I will lose everything.

A DWP spokesperson said: ‘We recognize people are struggling with rising prices, which is why we are protecting millions of the most vulnerable families with at least £1,200 in direct payments, including a £150 top-up payment for the disabled, and save households. an average of £1,000 per year thanks to our new energy price guarantee.

“If someone is having difficulty meeting their mortgage commitments, it is important that they speak to their lender, as they will have processes in place to help them. According to FCA guidelines, the lending industry should consider a range of support options, including offering to make up the difference in interest payments.

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