The average homeowner will need to find at least £100 extra each month to make mortgage payments when their fixed rate deals expire, according to debt specialists Newtomorrow.com.
The firm says people who think they will be unable to pay off other debts when their mortgage deal runs out should seek professional advice.
Newtomorrow.com estimates a quarter of a million people will need to find a new fixed rate deal in the next three months or face paying expensive standard variable rates.
The firm says the average homeowner with a £150,000 mortgage will need around £2,000 extra salary per year to be able to afford a new fixed-rate or discounted deal when their current deals expire.
In October 2005, the average fixed-rate mortgage was priced at 4.96%, meaning a £150,000 mortgage would cost around £885 per month, according to Newtomorrow.com. Current fixed rate deals are priced at around 5.79%, meaning repayments on the same mortgage would cost £996 each month.
Newtomorrow.com says homeowners with poor credit ratings may even find it impossible to get a new deal.
“Those who have poor credit histories may find it almost impossible to get a new mortgage deal at all as banks shirk from high-risk debt and raise interest rates further on sub-prime deals”, explains John Hall, chief executive of Newtomorrow.com.
However, the firm says the chances of a rate cut this year have increased as inflation begins to fall, which may help reduce the effects of payment shock for some homeowners.
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