_edited.png)
It's important to keep up-to-date with the latest news and trend in the mortgage market. one topic that has been making headlines recently is the interest rate rises, particularly in the UK mortgage market. In this blog post, we'll take a a closer look at what interest rate rises mean for mortgage borrowers and what you can do to prepare.
Firstly, lets look at why interest rates might rise. The Bank of England sets the base interest rate, which is the rate at which it lends money to other banks. When the base rate rises, banks may increase the interest rates they charge on loans and mortgages o cover their increased costs. The base rate can rise due to a variety of factors, such as inflation, economic growth and global events.
So what does this mean for mortgage borrowers?
If you have a variable rate mortgage, your interest rate will be directly affected by any changes to the base rate. This means that if the base rate rises, your mortgage payments will increase. If you have a fixed rate mortgage, your payments won't change during the fixed rate period, but you may face higher payments when your fixed rate period ends and you switch to a variable rate.
For many borrowers, an interest rate rise can mean higher monthly mortgage payments, which can put a strain on their finances. However, there are some steps you can take to prepare for potential rate rises. Here are a few tips:
Check your current mortgage rate: Make sure you know what interest rate you're currently paying on your mortgage and whether it's a fixed or variable rate. This will help you understand how a rate rise could affect your payments.
Consider switching to a fixed rate mortgage: If you're currently on a variable rate mortgage and you're concerned about potential rate rises, you may want to consider switching to a fixed rate mortgage. This will give you the security of knowing that your payments won't change during the fixed rate period.
Budget for higher payments: If you think a rate rise could affect your mortgage payments, it's important to factor this into your budget. Consider how you would cope with higher payments and whether you may need to cut back on other expenses.
Seek advice from a mortgage broker: If you're unsure about how a rate rise could affect your mortgage, or you're considering switching to a different type of mortgage, it's a good idea to speak to a mortgage broker. They can provide you with expert advice and help you find a mortgage deal for your circumstances.
In conclusion, interest rate rises can have a significant impact on mortgage borrowers in the UK. By staying informed and taking proactive steps to prepare, you can minimise the impact of rate rises on your finances and ensure that you're well-equipped to deal with any changes in the mortgage market.
YOUR HOME MAY BE REPOSESSED IF YOU DO NOT KEEP UP REPAYMENTS ON YOUR MORTGAGE
Approved by The Openwork Partnership on 28/03/2023
Comments