In December 2021, the Bank of England raised interest rates for the first time in a long time. As expected, this has begun to filter through to the mortgage market as lenders increase the cost of both fixed and variable rate mortgages. As a homeowner, or someone looking to get on the property ladder, what does this mean for you and how can you protect yourself against mortgage rate rises?
Mortgage Rates are on the Rise
With the December interest rate increase being widely anticipated, this is the third month in a row that we have seen the price of two year and five year fixed mortgage deals increase. A trend that we don’t expect to see stopping anytime soon with further interest rate hikes expected. It is now more important than ever to review your current mortgage deal and see what savings you could make before you end up paying much more than you might.
How Will Interest Rate Increases Affect You?
When was the last time you reviewed your mortgage? If the answer is never, or you can’t remember, then it is advisable to take the opportunity to do so now.
If you are on a fixed rate mortgage, when does that fixed term end? If it is in the next year or so, the chances are you will move onto a variable rate deal where you will be paying in-line with the Bank of England interest rates. Every time the rates go up, so will your mortgage payments. By moving to a fixed rate deal now and locking in that term for a guaranteed period, you will know how much you are paying and save yourself money.
While it may seem a daunting prospect, changing your mortgage is a lot easier than you think, and could save you thousands, especially if you seek advice from the experts. With more choice in mortgage products for over a decade, you could make considerable savings, perhaps even putting yourself in a much better position than you are now.
Future Proofing Your Mortgage
Making changes now means that you could secure a new fixed rate deal for the next two to five years that will actually protect you from the increase in interest rates, at least for the foreseeable future. Even paying a little more now on a new fixed term could save you money in the long run. Of course, finding the right deal is the responsibility of your independent mortgage advisor who will be able to share calculations on the various options available to you and give you an insight into each of the scenarios including:
- How much you could save over a fixed term
- What a variable rate mortgage would look like if rates were to rise
- How much your monthly payments would be going forward
Having all the information before you choose your new mortgage means you can make an informed decision and take away the unknown giving you the opportunity to plan and budget accordingly for the next few years and not leaving yourself susceptible to any nasty surprises.
Getting on the Property Ladder
It’s not easy to get on the property ladder, especially with the price of property as it is currently. There are many first time buyers out there that have been saving up waiting for the right time to purchase their first home. Unfortunately, the longer the wait, the more expensive mortgages become.
There is hope though as more products become available aimed at helping buyers to get on the property ladder. If you are saving and waiting to have enough of a deposit, it may be worth discussing your options now. You may be in a better position than you think.
The longer you leave it to act, the more expensive your mortgage is going to become. Borrowing from bank of mum and dad, if this is an option, is going to be more affordable than the mortgage rate rises you may have to pay if you wait. That said, with more products to choose from, you may already have enough of a deposit to secure your first mortgage.
Get Professional Advice and Peace of Mind
If you would like the peace of mind and protection from impending interest rate hikes and mortgage rate rises, or would like to look at your options as a first time buyer, we would be happy to sit down with you and review your situation. We can provide you with independent mortgage advice with access to the whole market and make sure that the mortgage you choose suits you, your family and your lifestyle.
Simply get in touch today to discuss with one of our experts – 01934 756717
Mortgages are secured on your property. You could lose your property if you do not keep up payments on your mortgage.