Strong competition in the market means that mortgage rates are getting lower. This is great news for doctors and dentists who are looking to purchase their first property, remortgage or move to a new product if their current deal has ended.
This article does not constitute advice. Professional advice should be taken prior to acting on any part of it. Your home may be repossessed if you do not keep up repayments on your mortgage or any other debt secured on it.
In the Bank of England’s Monetary Policy Committee last meeting in September it was decided that the base rate would remain unchanged. However, it was hinted that we may see a rise sooner than we expected. It is predicted that this will happen in November.
So, if you are looking to take out a fixed rate mortgage or are able to switch to a new product, now is the time to do it.
What affects mortgage rates
There are several factors which affect mortgage rates, however, the main one is banks accessibility to ‘cheap money’ which they can lend out to borrowers. They usually access this money from savers or by borrowing it from other banks on the money market. This is referred to as the swap rate.
The swap rate reacts to expectations of future interest rate and inflation rises. Both of which are predicted to happen in the near future.
Differences between a fixed rate and a variable rate mortgage
With a fixed rate mortgage, the interest you pay is fixed for an initial period. Typically, these are set at 2, 3, 5 or 10 years. The interest you pay will remain the same over the fixed period, even if the Monetary Policy Committee decides to increase the base rate.
When the initial period ends, you are moved onto the lenders Standard Variable Rate (SVR). Each lender sets their own SVR, but it usually double that of the fixed rate.
With a variable rate mortgage, the interest you pay varies during the fixed period. So, each month your payment may be different. This uncertainty often puts people off taking out this type of mortgage.
If the economy drops, the interest rate will likely drop as well, making your repayments cheaper. Likewise, if the economy grows, the rate of interest could increase making your repayments more expensive.
At Dental and Medical, every Monday is ’Mortgage Monday’. We publish details on the weeks best mortgage rates. Be sure to check out the latest deals, on our blog.
Save money on your mortgage
If you are not on a fixed rate mortgage, speak to Chris about your options and to get a competitive, independent quote:
Tel: 01403 780 770