In the last few years, the mortgage market has thrived thanks to competitive, low-interest rate mortgage deals. But with all that has happened in the world recently and inflation on the rise, it’s no shock that the Bank of England’s Monetary Policy Committee has seen fit to increase interest rates. Rate hikes will inevitably hit the mortgage market, so have you considered what that might mean for you?
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.
Can you afford a repayment increase?
Not everyone will be directly or immediately impacted by a rate hike. It will depend on what type of mortgage you currently have and when your existing deal is due to end. If you don’t have a fixed-rate mortgage, it’s highly likely you’ll have to deal with increased payments as a result of higher interest rates.
If you have a variable rate tracker mortgage that is linked to the BoE base rate, chances are, you’ll see an immediate impact on your mortgage repayments as a result of an interest rate rise. If you’re nearing the end of your initial term, you’ll either be switched over to your lender’s standard variable rate (SVR) or you’ll need to find a new deal, which will subject you to the increased interest rates — rates most likely much higher than when you first took out your mortgage.
Regardless, you’ll need to figure out exactly how much more you can afford and if you’ll need to tighten up any areas of your budget to be able to do so. If you know you’re nearing the end of your deal, start saving if you can, so increased payments in the future might be more feasible.
While the rates are still relatively low, it’s a good idea to shop around and consider your options. Even if you might be subject to some early repayment fees or other charges, you could end up saving in the long run by getting a jump on a new mortgage deal. As always, check with your mortgage provider for exact details so you know exactly what you’re dealing with and can be prepared.
Check your eligibility for alternative mortgage products
Your mortgage is probably your biggest monthly expense, so it makes sense to be worried about how higher mortgage repayments could impact your finances.
Even when the threat of increased rates hanging over us, it’s always best to speak to an expert to determine the kinds of mortgage products you’re eligible for that could help protect you from volatility. For example, fixed rate mortgages offer some protection against further interest rate rises, at least during the term of your agreement.
As specialist advisors, we can also make sure that you have the best mortgage deal for your circumstances. There are many deals available on the market so there’s always a chance you can get a better rate by switching lenders.
If you are concerned about how higher interest rates could affect your ability to meet your mortgage payments, don’t delay — get in touch with the experts at Dental & Medical Financial Services now. We’ll be able to help you to find the right mortgage deal for your individual needs and circumstances.