10th February 2023
A rise in interest rates can affect nearly every sector of the financial world. From pensions, savings, short-term borrowing and of course mortgages. The base rate is set and dictated by the Bank of England which can rise and fall. This in turn can influence the cost of certain mortgage repayments, which can be a distressing and worrying time. In our latest blog post, we cover everything that happens when interest rates rise and the effects you could feel, plus our top tips for dealing with high mortgage interest rates and how we can help you get the best deals, even in a climate of high rates.
When the Bank of England announces a rate rise, high street banks and lenders are not necessarily obligated to follow accordingly, but you're likely to notice that they amend the costs of certain unsecured borrowing and the interest that can be earned on savings. The type of mortgage you have and when your current deal is set to end will dictate if you are affected by high-interest mortgage rates. Those on a variable rate will see an immediate impact on their monthly repayments in response to a higher rate rise.
find me a mortgageHigh mortgage interest rates can be a worrying prospect for many homeowners, however, we have several tips to help you cope with this concerning time. Read on below for more information about dealing with high-interest rates on your current mortgage:
When assessing how to deal with a rise in your mortgage rate, the first thing to do is to identify with your lender exactly the kind of mortgage you are currently on. This is because different mortgages will face different impacts in the event of higher rates. If you aren't sure, check through the paperwork that came with your mortgage or reach out to your lender for clarity. Here at WIS, we always have a friendly customer service team on hand to talk through your mortgage deal with you.
After finding out exactly the mortgage you are on, you can now look more into how higher interest rates will affect you. This includes your monthly repayments and also your mortgage deal as a whole. Some mortgages, for example, may not feel an immediate impact. Fixed-rate mortgages will not see an instant rise, but you may find re-mortgaging at the end of their deal is much more expensive. Again for clarification, always reach out to your lender to discuss the real impact a rate rise will have on your deal.
For many people with a mortgage, a rate increase means they will have to fork out more for monthly payments. It's important to not only be aware of how much your monthly payment will be rising by but also whether you can afford it with your current outgoings. It might be worthwhile creating a revised budget, taking into account the rise in mortgage payments. It might mean you have to start cutting back on certain expenses to afford the impact of this rate rise. For rate increases on the horizon, we always recommend planning well in advance so you can either facilitate the rise to fit within your budget or reach out to your lender for assistance and advice.
If you are worried about how to afford high-interest rates, it is always worth reaching out to your lender. Do not wait until you get yourself in debt. Our friendly and supportive team at WIS is always on hand to listen to your concerns and provide valuable advice and steps to cope with high-interest rates.
It is always a good time to boost your credit score, and when there is a high rise in mortgage interest rates is no exception. By taking a few steps to improve your credit score where possible, you place yourself in the best position for a good deal with it comes to remortgaging. This is especially recommended for those currently on a fixed rate.
If you're in the position of a current deal coming to an end, you'll want to make sure that you get onto a new deal with the best rate possible. Assess whether the savings you could make are worth paying switching fees.
If you currently have low-interest rates, take advantage of the situation and overpay on your mortgage where possible. You will thank yourself down the road if your mortgage interest rate rises. Depending on your mortgage deal and the lender, there may be some limits to how much you can overpay or charges that incur, so always clarify this beforehand.
WIS is a mortgage broker/mortgage advisor in Kent determined to help you secure the house of your dreams. We offer free advice and specialist advice for contractors, reach out to us today to find out more and let us support you through high mortgage interest rates.
As a mortgage is secured against your home/property it may be repossessed if you do not keep up with the mortgage repayments.
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