Government minister quits because he can’t afford his mortgage
MP George Freeman resigned from government in November and has since said he was forced to because he couldn’t afford his rising mortgage payments.
The science minister said his mortgage payments had increased from £800 to £2,000 a month which “I simply couldn’t afford to pay on a ministerial salary.”
Now he has left government, he is free to take on work that pays better.
While George Freeman has the freedom to move into a better paid position or take on more lucrative second jobs, this isn’t the case for millions of homeowners up and down the country struggling to pay their mortgages.
And with £19 billion worth of fixed rate mortgages due to expire in 2024, and 1.5 million households facing mortgage increases of around £3,000 a year, we thought we’d look at the support that’s available if you’re finding your mortgage unaffordable.
Contact your lender for help
If you’re having trouble paying for your mortgage, you need to speak to your lender – don’t bury your head in the sand.
You are protected by the mortgage charter, a set of standards agreed last year by the chancellor, major lenders, and Financial Conduct Authority (FCA).
Under the charter, anyone worried about mortgage repayments can contact their lender for help and guidance without it impacting their credit file.
Lenders must support customers who are up to date with their payments to switch to new mortgages at the end of their existing fixed rate deal, without undergoing affordability checks.
They must also help anyone struggling by offering to extend their mortgage, so the payments are reduced, allow them to switch to interest-only payments, or have a payment break for six months without it affecting their credit rating.
Assess your household budget
Go through your household finances in detail to see if any savings can be made. Any spare cash you free up can go towards your mortgage payments. You can use our free budget planner to make this easier.
It’s also worth checking to see if you’re entitled to any benefits - nearly £19 billion goes unclaimed every year. Use our free benefits calculator to see if you should be claiming more.
Support for Mortgage Interest (SMI)
The Support for Mortgage Interest (SMI) scheme was created to help households who receive certain benefits, such as income support, jobseeker’s allowance or pension credit.
The support is essentially a loan with the payments being made directly to your lender. It helps to cover interest payments on up to £200,000 of your mortgage – or £100,000 if you’re receiving pension credit.
The loan isn’t interest free. You’ll have to pay if off eventually with the interest at around 3.03% (this could change and go up and down) being added to the total amount you’ll repay.
Compared to normal forms of credit though, an SMI loan can be cheaper and more flexible, and importantly – it won’t affect your credit rating.
Prior to last year’s autumn statement, you needed to have been claiming benefits for nine months to be eligible for help. However, Jeremy Hunt changed this, and you now only have to wait three months before you can claim.
Have insurance – use it!
Millions of people choose to pay for payment protection insurance. If you have a policy like this, check to see if it can help you. Normally, it will only pay out if you can’t work due to accident, sickness and sometimes unemployment but every policy is different and it’s worth checking to see what you’re covered for.
There’s three different polices that might pay out including mortgage payment protection insurance (MPPI), accident, sickness and unemployment policies, or income protection insurance (IP).
There’s lots of ways you can use your home to make money. It could even pay for itself – e.g:
- You could take in a lodger and earn up to £7,500 a year tax free. If you earn any more you’ll need to complete a tax return and pay any tax due on the remaining income. Use a website like SpareRoom to advertise your space. And make sure you let your insurance know so your policy doesn’t become invalid.
- You could rent out your drive as a parking space on an hourly, daily, weekly, or monthly basis. You can advertise your space on websites such as YourParkingSpace, JustPark, Park On My Drive or ParkLet. You might have to pay a listing fee and you’ll have to pay between 5% and 20% in commission.
- Turn your home into a film or TV set. You don’t need to live in a fancy property to attract location services - plenty of ordinary houses are used every day. You can advertise your home on agency websites such as Scouty, Location Works, Amazing Space Locations and Shootfactory, and make between £500 to £2,000 a month from one to three booking.
- Rent out your storage space. If you have an empty loft or garage then consider putting it to work. Use websites like Storemates or Stashbee to list the space. You can expect to earn about £1,000 a year by renting out dead space.
- Hire out a spare room. Millions of workers now work remotely in unsuitable conditions at home. If you have a spare room, you could earn between £50 and £250 a day by renting it out to a home worker. List your space on OfficeRiders which is used by professionals looking for available office space.
Already in arrears? Get free debt help
If you’ve missed mortgage payments or are worried about being able to meet them, you should seek free debt help.
We can help you to find the right solution for you.
Caroline has worked in financial communications for more than 10 years, writing content on subjects such as pensions, mortgages, loans and credit cards, as well as stockbroking and investment advice.
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