For the last few years, interest rates have been at their lowest in decades. Although this has been bad news for savers, it’s meant that many homeowners have benefited from relatively manageable mortgage repayments. Unfortunately for homeowners, all this is set to change as financial experts are warning that an interest rate rise is now imminent and rates could shoot up in a matter of weeks! Do you have your own place? If so, read on to find out how an interest rate rise could affect your finances.
What would an interest rate rise mean for homeowners?
If interest rates do rise, as many finance experts have predicted, millions of homeowners across the UK will see their mortgage repayments increase. For some people, an interest rate rise could make their expenses unaffordable and in very severe cases, people could lose their homes.
Do you have a fixed rate mortgage?
If you’re a homeowner with a fixed rate deal, you don’t necessarily have to do anything. Your mortgage repayments will already be protected from interest rate rises and you’ll continue to pay the same amount each month until your fixed rate deal ends.
If your fixed rate deal comes to an end very soon, it may be worth speaking to a mortgage broker to see if you can save money by remortgaging. Remortgaging your property before your fixed rate ends may see you having to pay early repayment charges though, so check with your mortgage broker or financial advisor to see if this will see your better or worse off in the long run.
Are you on your lender’s standard variable rate (SVR)?
If your fixed rate deal has already ended (or you never had one) and your mortgage repayments are based on your lender’s standard variable rate (SVR), it may be wise to lock yourself into a new fixed mortgage deal now. Rates are still at their lowest in years, making this an ideal time to remortgage your home and protect yourself from future financial uncertainty.
How much could my mortgage repayments change?
The cost of an interest rate rise will vary from person to person. If the interest rate was to increase by one percentage point, someone on a standard variable rate of 4.6% could see their repayments increase by £117.10, assuming they have £200,000 outstanding on their mortgage balance and 25 years remaining.
If you’d like to remortgage your home or you need help to decide if a remortgage is the right move for you, I’d recommend using online mortgage broker Habito. They won’t charge you a penny for their service and if you sign up using this refer a friend link, you’ll earn £100 cash on successful completion of your mortgage. I’ll get £100 cash too.
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