How to lower your mortgage payments

Published 29th of September, 2022

Picture credit: Kaleb Tapp

Worried about your mortgage?

Understandably, increasing numbers of homeowners are worried about how they will be able to afford their mortgage as interest rates rise.

We believe fractional homeownership can take the mortgage pain and the strain away whilst also allowing homeowners to benefit from the high levels of house price inflation over the last couple of years.

To learn more about how fractional homeownership could help you click the learn more button:

How to lower your mortgage payments

Normally, during times of market stress, there are only two ways to lower your mortgage repayments: switch to an interest-only mortgage, or extend the length of your mortgage.

Switch to an interest-only mortgage 

If you currently have a repayment mortgage you can ask to switch to an interest-only mortgage. This is likely to lower your monthly payments, although you will end up paying more money overall as you are no longer paying off any of your mortgage debt each month, and therefore, you will pay more mortgage interest over the life of the mortgage.

Extend the length of your mortgage

Secondly, you can ask to extend the length of your mortgage, i.e. pay it back over a longer period. This will lead to a reduction in your monthly mortgage payments, but you will end up making more of those monthly payments, and therefore, the overall cost will be higher due to the higher number of payments.

Reduce your mortgage payments with fractional homeownership

However, fractional homeownership offers a third way, which we believe will be attractive to many homeowners that leads to lower monthly mortgage payments and paying less on your mortgage overall.

How fractional ownership can reduce your mortgage payments

Fractional ownership allows you to reduce the size of your mortgage and unlock the house price gains we have seen over the last few years.

Average house prices in the UK have increased by more than £50,000 since the start of the COVID-19 pandemic. Homeowners, therefore, on average, have £50,000 more equity in their homes than they did at the start of the pandemic.

Currently, the only way to access that housing equity is to either re-mortgage (ironically take on more debt) or sell your whole house.

Fractional homeownership allows you to sell part of your home (a fraction), for instance, you might want to sell £25,000 of the increased equity. You could therefore reduce your mortgage by £25,000. This will lead to lower mortgage payments and less interest paid overall.

Lock in house price gains with fractional ownership

If you, like many other people, believe that house prices are going to fall, fractional ownership allows you to take advantage of the current level of house prices, selling a bit of your home today allows you to get access to the cash tied up in your house as you need it without taking on any additional debt. To find out more you can join our waitlist. 

Can I stay in my house if I sell a bit of it?

Yes, our aim is that all that happens is when you come to sell your home the proceeds relating to the fraction you don't own (after paying off your mortgage) are paid to the investors who purchased part of your home. If you sold 5% of your home for £25,000 today, you stay in your home until you choose to move or sell the property, at which time you pay 5% of the value of your home to the investors.

Can I buy my home back?

Yes, you can make an offer to buy back the bit of your home you sold at any time, and if house prices have fallen, you may be able to buy it back for less than you sold it for.

Fractional homeownership is a new way to release the equity in your home

We do not believe that releasing equity from your home should require you to take on debt. Debt is the opposite of equity. We believe that you should have the opportunity to sell the equity in your home as you need it and have the opportunity to buy it back whenever you want.

We are building twindaq to do just that, a platform where you can buy and sell shares in your home just as you can buy and sell shares in companies listed on the London Stock Market. To learn more about twindaq and to join our waitlist click the link below

Housing Hailey

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