1.5 million homeowners warned they need to find £1,800 before bill

Over the next year 1.5 million homeowners are expected to face sharp increases in their monthly mortgage payments when their fixed rate deal comes to an end, with prices rising by approximately £1,800 a year on average. Wealth at Work has outlined some top tips below to help people cut costs and manage their finances.

It urges households to create a budget, saying: "The first step to cutting costs is to create a budget. People should work out what exactly their income is each month and then check their bank statements to clarify what outgoings they have."

It adds you should track finances, saying: "After creating a budget it is important to keep track of spending. Ditching takeaways, taking lunch to work and learning to budget can make a huge difference. For example, the average household in the UK spends £1,220 on eating food out (e.g. takeaways and restaurants) each year."

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Telling people to shop wisely, it says: "Plan shopping in advance as it will allow time to search for the best deals and reduce expenditure on non-essential items. Also, by switching brands it might be possible to significantly reduce the price of the regular shop.

"Someone who usually spends £60 a week, could save £20 by changing supermarkets, a saving of £1040 a year, and more for a couple or family. When it comes to big purchases, such as if a washing machine breaks, discount vouchers are often available through voucher and discount websites and many workplaces offer employee discount schemes.

"When shopping for a particular product, Idealo finds the best price online for a particular product and CamelCamelCamel allows you to track the price of Amazon products. Consider installing browser extensions like Honey that search for discount codes during online check-out.

It says: "It is possible to make significant savings on a range of household bills from car and home insurance to phone, broadband, TV and mobile contracts. Price comparison websites can help to make it easy to compare the different deals available. Changing to a SIM only deal on your mobile once your out of contract could save £321 a year. Plus, changing broadband providers could save £179 a year.

"Many insurance policies automatically renew each year so many people may be paying more than they need to if they don’t shop around. It’s a good idea to find out when any contracts are due to end and put it in the diary a month earlier so that there is plenty of time to shop around. For example, using a price comparison site could save up to £550 on car insurance, so £1,100 for a two-car household."

Jonathan Watts Lay, Director, WEALTH at work, a leading financial wellbeing and retirement specialist, commented: “Many people may be worried about when their fixed term mortgage rate ends, and their monthly repayments increase. This can be a stressful time, especially for those who may already be worried about their finances. However, there are steps people can take to effectively manage their finances. Creating a detailed budget, cutting back on unnecessary spending, and shopping around are small changes that can make a big difference.”

He added: “Overpaying on a mortgage before it’s renewed at a higher rate could be a good idea. This is especially true for those who are going to struggle to pay a new higher monthly rate, as they may be able to secure a better deal by paying more off in advance. People should also be aware that when overpaying on a mortgage, this money could always be accessed again when they come to negotiate their mortgage deal.”