Your personal finances question answered: ‘My mortgage is up for renewal and I’m only just scraping by’ | Money

In a week where Rachel Reeves had hoped to confirm a period of economic stability in Tuesday’s spring statement, global events once more overtaken the government’s best laid plans. The US and Israel’s war on Iran has shaken global markets and caused huge fears about energy prices and the impact they will have on inflation and the cost of living.

Hilary Osborne, Guardian’s money and consumer editor and has been busy answering your questions about the wider economic fallout – and many others below.

Hilary has now finished but please do continue the discussion below.

Thanks for taking part.

When do I switch energy provider?

shankspony asks:

Hi Hilary, I had just come to the end of a fixed rate tariff for my gas and electricity and I opted to renew it and then cancelled it because I thought the prices would be coming down. Then the war with Iran started. I contacted my energy company (Octopus) three days ago and opted to fix again. Is this the right decision or did I leave it too late?

Hilary:

If you managed to grab a fixed rate below the current price cap then well done – even if it isn’t as a keen a deal as you might have got last week, you will probably still be happy with your choice if energy prices go in the direction that experts are expecting.

In April, the price cap set by the regulator, Ofgem, is set to fall to £1,641 a year for a typical household buying gas and electricity from the same supplier and paying by direct debit.

The cap was decided earlier this year and based in part on wholesale prices over the winter. The next change will be in July, and it will reflect prices for the period we are in now, so increases sparked by the war will be a factor in the calculations. Yesterday the analysts at Cornwall Insight suggested this could add an extra £160 a year to the typical dual fuel bill – taking it to £1,800, which is just above where we are now.

In recent days energy companies have been pulling some of the cheapest tariffs, but there are still some offering money off the current cap and that for April, which means they could still look like a good deal in the summer. So for people who haven’t been as quick as you there is still time to fix.

How do I cope with council tax rises?

Wall123 asks:

I worry about council taxes rising every year. I can control most of my costs and can do without but council taxes are a nightmare. What can I do?

Hilary:

This is a tricky one – council tax bills are set to rise again in April, and in many areas they will be going up by the maximum 4.99% that can be applied [in England] without a referendum. As an individual there is not much you can do about this, beyond checking if you are entitled to any discount. If you live on your own you should be entitled to 25% off your annual bill, and there are certain people who are exempt from being charged, including students. To check if you qualify to pay less, you can put your postcode into the government website and it will direct you to the right page on your council’s site. If you’re really struggling, do tell your council as they often have discretionary help available. Don’t wait to get into arrears as councils can escalate debts quickly and ask you to pay your entire annual bill after just one missed payment. This is something debt charities are currently lobbying the government to change.

How do I prepare for mortgage hikes?

Roguebot asks:

Hi Hilary, when I took out my first mortgage as a sole buyer four years ago interest rates were below 2%. Since Liz Truss’s disastrous budget, things seem to have changed. Now coupled with AI as a competitor in the jobs market my workplace is issuing compulsory redundancies. My mortgage is up for renewal next year. I’m only just scraping by as it is. What steps can I take now to prepare for potential redundancy coinciding with a mortgage hike? I don’t want to lose my home as I spent a decade saving for the deposit while in the most hideous rental market. It’s unlikely a buy-to-let mortgage would cover outgoings and I do not have a second room to let.

Hilary:

I’m really sorry to hear how tough things are for you. Things change very quickly in the mortgage market these days, and so it’s impossible to predict where rates could be by the time you remortgage but you are wise to think about how you can prepare yourself for increased payments.

One thing you could do in the short term is try to build up some savings if you have any spare money at the end of each month. This will give you something to live on if you do get made redundant, and if you don’t you could use the money to pay down a bit of your mortgage when you come to getting a new deal, which will reduce your monthly payments. This could be better than overpaying each month until then, because you might need the money for living costs.

If your worst fears about your job are realised, get in touch with your mortgage lender straight away. It may consider letting you move to interest-only payments for a period, which will mean your loan costs more in the long term but will make it more affordable in the short term. Make sure, too, that you claim any help you are entitled to – there’s a really helpful tool online here.

I hope things go well for you.

Any news on car finance reimbursements?

StCongar asks:

Is there any update on the mis-sold car finance payouts? This windfall will help with cost of living issues.

Hilary:

A timely question: just yesterday the Financial Conduct Authority issued an update on its consultation about compensating drivers who took out loans to buy cars and were not aware that the brokers were receiving commission. The FCA says it is working towards people getting a payout this year. It hasn’t published the final rules for the compensation scheme yet, but says it will do so “in late March”, which is slightly vague but only a few weeks off. Firms will be given three months to implement the compensation scheme, or five months for older payments, and there will be a period after that when payments must be made – for people who have already made a complaint, lenders will have three months after the implementation period to tell them what compensation they are getting. That means it will be autumn before people need to be told, and after that that they will be paid.

It says people who have not complained should do so, rather than waiting. There’s information on how to do so on its website:

How do I set up savings for a newborn?

redstar1000 asks:

I have an eight-month-old baby. What is the best savings product for him?

Hilary:

I’m afraid I can’t give you bespoke financial advice, but I can suggest some things you should consider when making this decision. You should think about what the money is for: are you saving for the long term, say, for university, or is this money you want to use during their childhood? This will help you decide whether you want a savings account or want to take some risk by putting it in the stock market. Over a long period typically you will get better returns from a stock market investment than from a savings account.

For either, it is worth having a look at a junior Isa – these are special accounts which are held in the child’s name and let them earn interest or stock market returns without there ever being a tax bill.

You can compare junior Isa savings accounts rates on the Moneyfacts website – make sure you have clicked to order by “rate” rather than “provider links first” so you get to see the best across the market, not just those it has links with. That website also has a section for children’s accounts outside of the Isa so check how rates compare there. If you want to pay a monthly sum, look at regular savings accounts; if you want to pay a lump sum and can lock it away, check out fixed-rate fixed-term accounts.

At the moment lots of the best rates are being offered by small building societies. If you’re not lucky enough to live near one of them, you will have to apply by post, usually, but the effort is worth it for the better rates.

Bear in mind that best-buys do not typically stay at the top of the table forever, so if you want to get the best returns, you should review the account probably every year and move it if you can.

Junior Isas invested in stocks and shares involve a bit more research, although you don’t need to become a stock picker as a lot of companies offer ready-made portfolios and you just need to decide how much risk you want to take with the money. Which? Has a guide to its best-buy providers which is a good starting point.

Is there any help for allergen-free food costs?

Whatthehell100 asks:

We rely on minimal items in the “free from” shelves: staples like bread, pasta and flour. Three of our family are coeliacs, we have no choice but to pay the ever increasing costs of these staples. Those with food allergies are also tied to the exorbitant costs. Are we missing any support to cushion us from these – and how can our food supply chain be secured. I’m constantly coming across empty shelves, or poor quality alternatives. Yes we eat naturally gluten-free, but sometimes my daughter just wants a sandwich. Is this too much to ask?

Hilary:

I’m afraid to say that this is an area I need to learn more about, so I cannot be much help. Have you looked into whether you can get any of the food you need prescribed by your doctor? Coeliac UK has information about how this works and a tool allowing you to search to see if your doctor might help.

If this looks like an option, it’s worth seeing if you might be eligible for free prescriptions (assuming you live in England and would otherwise be charged). Otherwise, the £9.90 cost of prescriptions in England is likely to make this more expensive than going to the supermarket, unfortunately.

How do I choose mortgage rates?

JMonsoon asks:

If you were looking at mortgage and interest rates, would the advice be to go for a shorter rate now, with expectation of larger rate drops in following years? Or is it a bit more complicated than that?

Hilary:

Yes, I’m afraid it is more complicated than that. The first thing to say is that the decision will rest on factors that are individual to you, as well as what’s going on in the wider world. I’m not able to give you personal financial advice so this can only be a steer on some of the things to think about.

The war in the Middle East is already having an effect on mortgage rates – Moneyfacts says some lenders that were going to cut rates this week changed their minds, and I’ve heard from brokers that some others are gearing up to raise prices – but many still reflect where interest rates were expected to be in two or five years’ time, before the crisis began. It is likely that once they have sold out we will see prices go up, as experts are now expecting only one base rate cut this year, rather than two.

But when deciding whether you should lock in for two years rather than longer you should think about the whole cost of each mortgage. Arrangement fees on some of the best rates are huge now, so if you have a small mortgage, paying almost £2,000 now and then again in a couple of years should be part of your calculations. You should also think about your own circumstances – if something in your life is set to change, will you be able to get as big a mortgage in a couple of years’ time? If you are borrowing 95% of the cost of your property, could you struggle to remortgage if prices go down?

I used to edit What Mortgage magazine and I spent two years being faxed details of better mortgage deals than I was on (it was a while ago). Since then my main advice to people has been to get a mortgage you feel happy you can afford each month, remember why you felt more comfortable fixing or choosing a variable rate deal and then don’t look at rates again until you need to.

Can I get help for my scammed mother?

DebA200 asks:

My mother has been scammed on investments and recovery. It’s heart breaking this has happened to her at 82 years old. Can you recommend a solicitor or reputable company to help?

Hilary:

I am so sorry to hear that. I would usually suggest seeing what, if anything could be reclaimed from her bank. Depending on when it happened, she might qualify for help under the rules set out by the payments regulator. My colleague Zoe Wood wrote this useful Q&A about investment fraud, which you might find helpful.

If you think we can be more help, please do email me or money@theguardian.com with some details and we can take a look.

Scams are rife, and we run a weekly column warning of the latest. I’m sorry it’s too late for your mother but hopefully other readers can alert their friends and family to the different ways they might be caught out.

Why don’t governments control EV prices?

MademoiselleK asks:

With nearly two million EVs on our roads and EV sales climbing rapidly (probably will be a big sales spike as a result of the Iran war) why is there no government control over the prices the operators of public EV charging stations can charge?

Hilary:

I think we are a long way off a world in which the government would attempt to control charging prices by introducing any kind of cap on them, but if the market does seem to be uncompetitive the competition regulator could get involved. It recently tackled petrol and diesel pricing – it found retailers were overcharging and has forced those above a certain size to report how much they charge so consumers can shop around to find the cheapest.

Presumably this could happen in the EV charging market one day if retailers appear to be ripping off drivers. In the meantime, apps such as Zapmap can help you find the best prices.