The long-awaited day has finally arrived – Brexit is just days away. Under current proposals, the UK and the EU will officially part ways on 31 January. What exactly will happen after though, remains to be seen, so we’ve put together a list of few ways your mortgage may be affected.
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.
How might things change
One of the possibilities Brexit brings is that Britain may no longer need to follow the EU mortgage credit directive, which has protected consumers but has also been blamed for fostering an environment in which people felt “trapped” in their mortgage deals. Homeowners feel they won’t be able to secure another mortgage with the incredibly strict requirements providers have.
Incumbent Prime Minister, Boris Johnson, has already said he wants to mitigate mortgage rules for first-time buyers, and post-Brexit is the perfect time to institute his plans.
Interest rates may be on the rise
It’s hard to predict the exact reaction of the market, but both a deal or no deal outcome could mean a change in interest rates, which would impact the wider economy. If there’s a downturn, the Bank of England might reduce the base rate to encourage growth.
But if inflation gets out of hand, the government might increase rates.
If rates do rise, the obvious result would be an increase in mortgage rates, but if you’re on a fixed-rate mortgage, there’s no need to worry. However, if you have a variable rate mortgage, now might be the time to switch to a fixed rate to keep your monthly repayments consistent in the uncertain future. Keep in mind any exit fees you may be liable for if you choose to switch before the end of your term.
If rates drop, then a variable rate mortgage suddenly becomes more appealing.
Financial experts believe competition between banks would help keep interest rates at their current low level, which benefits first-time buyers.
No matter which type of mortgage you have currently, you’ll still need to think about which way to go when your existing mortgage deal ends. There are upsides and downsides to each option, so take the time to consider your personal situation before deciding.
Where to find advice and guidance
If you’re in need of assistance or guidance during your mortgage search, get in touch with Chris Spurgeon, our mortgage expert, to discuss your individual circumstances and how he can help you.
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