Interest Rates and Mortgages
With everything going on at the moment with the economy, there is a lot of change and uncertainty around mortgages.
Notably, we’ve been hearing a lot recently that interest rates are going up. The UK Interest rates are set by the Monetary Policy Committee (MPC) of the Bank of England (BoE). This determines the interest rate at which the bank will borrow from the BoE.
As mortgages are sums of money lent by the bank, when the MPC increases the base rate, this will have a direct impact on mortgages. In light of this, we wanted to provide some clear advice about how to navigate the rise in interest rates through these times:
Check in with your mortgage
It’s a good time to dig out those details about which rate you are on, and how much money you have left to pay over what number of years. This will then help you to work out how a further increase in interest rates will affect your current mortgage.
If you haven’t already, it might be worth signing up for internet banking with your mortgage provider, making it quicker and easier to view your details in the future.
2. Work it out
Once you know where you stand with your current mortgage, it’s the perfect time to assess your position financially and work out how any further increases in interest rates will affect your mortgage repayments. Once you know this, it’s possible to review your current spending and perhaps save a buffer to cover for any further rises in the interest rate.
3. Switch mortgages
If you have a variable mortgage (i.e. no minimum term), you will see the impact of the increase in interest rates almost immediately. If the mortgage is fixed, it will only be impacted once the mortgage term is up.
It is therefore advisable to do your research and have a look for the best offer out there - it might be that a fixed rate mortgage is best to lock in a deal if you are currently on a variable rate, especially if you know you won’t be moving in the near future (as they usually incur a cost if leaving earlier). There are some great comparison websites out there, making it easy to browse for the best rate. It is also worth having a look if you’re on a fixed rate, as it may actually be worth making the switch and paying the early exit fee, if it works better financially overall.
Whilst we are in uncertain times, please know there is plenty of support and help out there when it comes to mortgages. We have found these websites useful in particular:
https://www.moneyhelper.org.uk/en/homes/buying-a-home/how-to-prepare-for-an-interest-rate-rise
https://www.thetimes.co.uk/money-mentor/answer/mortgage-rising-interest-rates/
We are also always on hand to help with any questions you may have.
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Our homes include a range of options from 2 bedroom homes, 3 bedroom bungalows and 5 bedroom executive houses.
Our latest developments are situated in Bolsover and Tansley. If you are looking for a high quality new home then please get in touch.