Rises in interest rates are the latest worry for homeowners, amongst the mounting financial pressure of rising energy, food and fuel bills.
The Bank of England base rate increase from 3% to 3.50% was made on the 15th December 2022 to try and slow rising inflation. Whilst it may seem like a modest increase, it is set to affect homeowners and tenants in both the immediate and long-term.
For many people, rate rises will mean an increase in their outgoings at a time when incomes are already stretched. It is important, therefore, to consider how a rise in interest rates might affect your ability to meet your mortgage or rental payments.
Are you on a tracker mortgage?
Tracker mortgages do exactly that. They track the base rate, and as this has been at an historical low for so long, it has effectively saved many people thousands of pounds in recent years. You’d typically find yourself on a tracker mortgage, if your fixed deal has ended - as this is what lenders tend to do by default, or you could have signed up to a tracker mortgage deal. Either way, it is vital to know which type of mortgage you currently have in place.
Tracker mortgage payments will rise in line with the interest rate rises.
Time to switch from a standard variable rate?
Mortgage customers on a standard variable mortgage, will typically see their mortgage rate increase as interest rates rise, but this is ultimately at your lender’s discretion. Your standard variable rate mortgage terms and conditions will detail if a rise is likely, so it is worth checking with us as soon as possible so you know where you stand. Switching from a standard variable rate mortgage to a fixed rate could significantly reduce your mortgage payments.
Phew, my mortgage is fixed. But for how long?
Most borrowers are on fixed rate mortgages, but even though your repayments will not change immediately, it’s imperative you check how long is left on your deal as it is highly likely you will have to pay more for your next mortgage. If you are one of the 1.5m fixed-rate mortgages that are due to end this year, it might be worth speaking with us sooner rather than later, as we may be able to help you find a more suitable mortgage before you incur the higher costs associated with rising rates.
The good news is mortgage customers can get in touch with us - with six months or less left on any current mortgage - and we can start looking for a new mortgage product for you. We use a panel of over 90 mortgage lenders who will allow us to secure a mortgage rate up to six months in advance of its start date.
Could you remortgage for a better rate?
If you are worried about the impact higher mortgage payments may have on your finances, then why not book an appointment with our trusted and experienced mortgage consultant? We have access to whole-of-market rates, and can promptly check to see if you are eligible for a different type of mortgage product, such as a fixed rate mortgage, which would offer you some form of protection against future interest rate rises.
Talk to Tony
Skyline Mortgage Consultants can advise as to whether you are on the right mortgage for your circumstances. If you haven’t renewed your mortgage in the last few years, then now could be the right time to do so. There are many mortgage products available to you, and there could be mortgage deals available to you, if you consider switching lenders.
Your home (or property) may be repossessed if you do not keep up repayments on your mortgage or any other debts secured on it. A fee may be charged for mortgage advice. The amount will depend on your circumstances. The Financial Conduct Authority does not regulate some forms of Buy-to-Let.