In order to recoup some of the unexpected government spending used to combat Covid-19 and protect people’s livelihoods during lockdown, many UK councils are set to raise council tax rates from as early as this month. Research shows that the rise could add more than £150 to monthly household bills.
According to a report from the Mirror, two-thirds of UK councils are likely to implement a tax rise of around 5%. This means that, for the first time in history, some of our council tax bills could exceed £2,000 a year.
According to research from StripeHomes, the Newcastle-based property developer, the vast majority of people think the rise is unjustified and 23% say it will leave them financially vulnerable.
Critics of the tax hike say that it is going to hit low and middle-income households far more than it will high earners.
Quoted in the Express, James Forrester, the Managing Director of StripeHomes, said:
“Not only is it ludicrous that a London millionaire can pay a comparable level of tax to a family struggling in the North East, but the figures show that those in Northern regions and even the Midlands are due to be hit hardest, as they’re the ones who will see the largest increase in council tax as a percentage of their outgoings.”
Should I remortgage to save money?
In the face of higher tax bills, some homeowners are choosing to move onto their lender’s Standard Variable Rate (SVR). The hope is that this will result in lower monthly payments and that Early Repayment Charge (ERC), will mean they can pay as much or as little of their mortgage back as they like each month.
However, a warning has been issued to say that an SVR can just as easily result in higher monthly payments. Instead of turning to SVR, some experts recommend remortgaging.
Eleanor Williams, a Finance Expert at moneyfacts.co.uk, said:
“Undoubtedly, although there may be those currently struggling financially, it would be unwise for borrowers to assume that they would not be eligible for a new mortgage, even if their existing lender is unable to offer a new deal.
“Seeking independent advice from a broker who is up to date on the ever-changing mortgage sector could unveil options which may save them significant sums.
“There are ‘furlough friendly’ lenders who may be able to assist, lenders who may have different lending criteria to their current provider, and some brokers may have access to deals which borrowers cannot obtain directly.”
If you would like any advice or guidance on remortgaging, our in-house property expert Russell Quirk is very happy to help. Just drop us a message in the comments section below and he will get back to you asap.