Looming mortgage rate increases
With inflation pushing interest rates up, it has become increasingly important to manage your mortgage proactively to ensure you are not paying over the odds.
Is your fixed mortgage deal coming to an end?
To get ahead of further mortgage rate increases and prevent your monthly payments from rising, consider making arrangements to switch to a new fixed deal. Failing to remortgage means you will default onto your lender's Standard Variable Rate (usually much higher than what you would pay on a fixed). See below…
Current average SVR = 4.14% Current average 2-year fixed =1.89%
If you didn’t know already, you can apply up to six months before your current deal ends to secure a new one and lock in the rate…stay one step ahead of a changing market!
Has your fixed mortgage deal already ended?
If your fixed deal has ended, you are now on your lender's Standard Variable Rate. You may have noticed an increase in your monthly payments when this happened. But please note, this does not mean you will pay off the loan quicker, you’re just paying more in interest!
Some people think that they have to remain on a variable rate when they plan on moving home soon because having a fixed mortgage deal would present them with penalties. When in fact, some lenders will allow you to port your fixed mortgage to a new property without any.
Will mortgage interest rates keep rising?
When the Bank of England increases the base rate, lenders who borrow from them (like your mortgage lender), increase their interest rates too. For those on a variable rate, I’m sure you noticed your monthly payments go up recently when the base rate increased from 0.25% to 0.5%. Well, analysts have predicted the Bank of England will increase the base rate to 0.75%, while some say there is a risk of it jumping to 2%!
With the above in mind, it’s worth checking when your current mortgage deal ends or taking action if it already has. As ‘whole of market' mortgage brokers, we can review your current arrangements and should you choose to switch to a new fixed deal, help you find the best rate available. Click here to get in touch.
