Jenny Letts remortgaged in 2024 and saw her bills soar – but she hopes to get a reduction this April
When Jenny Letts bought her home eight years ago she knew she and her husband were stretching themselves financially.
They were buying their “forever home” – a four bedroom house in Staffordshire, which they would share with their two twin boys – and had thought about the potential risks.
“We always looked at what the worst that could happen would be – so that might be one of us losing our jobs for example,” she says.
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But what they hadn’t fully accounted for was the interest rate rise that came when they remortgaged the property in 2024.
When Jenny, 49, bought the home for just over £400,000, the Bank of England interest rate was 0.25 per cent, and so the borrowing costs on the mortgage were cheap.
But by the time April 2024 came round and they were due to remortgage, rates were at their highest in nearly two decades.
It meant that after remortgaging, their costs shot up by around £800 per month – £9,600 per year – with the couple paying a total of £2,200 per month for their home loan.
“It was like a tidal wave – we had to strip everything back in terms of spending,” explains Jenny.
“I had to put the increase on the fridge as I’m a visual person and helped me realise how much it actually was,” she said.
She cancelled gym memberships and subscriptions, and the family cut down on travel abroad.
“We’ve become so use to being prudent with our money”, she said.
Jenny also used mortgage cashback app Sprive to reduce her mortgage balance. The app lets you earn cashback from shopping that’s automatically saved and used to make mortgage overpayments.
But come this April, when their two-year mortgage fix comes to an end, Jenny is hoping they may get some respite from the high costs.
Mortgage rates are generally lower than the 4.8 per cent rate which Jenny got on the property – with deals well below 4 per cent for many customers.
It means they may be able to cut their bills, and while the family will still be sensible with their spending, they may have some more cash left over at the end of each month.
She explains: “Though I’ve been used to being prudent I would love to join the gym and maybe get some new clothes, but the twins will come first.
“They’re teenagers now and we can’t get away with getting them cheap stuff, there’s trends and things they would love to keep up with.”
Jenny’s situation outlines one of the scenarios some of the 1.8 million households coming off mortgage fixes this year will face.
Many families coming off five-year fixes signed in 2021 will find themselves paying far more than they currently do, as they are rolling off deals that could be at below 2 per cent interest rates.
But there is a second profile of mortgage holder – those on two-year fixes signed when deals were among the most expensive they have been in recent memory. These people could finally see their financial pressures lifted.
Elliott Culley, director at Switch Mortgage Finance says: “Borrowers will have different perspectives on current rates depending on what camp they are in. You have the clients coming off very low five-year fixed rates whilst others are coming off high two-year fixed rates.
“Most two-year fixed renewals I have been reviewing are in a better position now with rates dropping this has led to savings for clients.”
Jenny, who works in PR, says many of her own friends fall into the second camp.
She says although she bought an expensive home and stretched herself financially though, she does not regret the decision.
“Lots of friends are in the same position, we’ve bought houses that stretched us, but we hope it’ll pay off.
“We weren’t being stupid buying this house because we hope that over time, as we pay off the mortgage, it will go up in value,” she says.
For now, she’s looking forward to the bill reduction in April, at which point she hopes her bills could drop by several hundred pounds per month.