Four ways to take action after the rate rise
Following the announcement that the Bank of England has increased its Base Rate to the highest level in a decade – 0.75% – some lenders have already announced hikes to their own mortgage rates.
If you are affected it’s time to take action – but what can be done?
Financial information provider Moneyfacts has published four top tips for borrowers who want to ensure they are on the best deal available to them.
As Charlotte Nelson, finance expert at the business, said: “This latest announcement is likely to have borrowers worried about their monthly repayments rising. However, the important thing is not to panic but instead use the rate rise as a catalyst to sort out your mortgage.”
Here’s your four-step guide to dealing with the rate hike.
1. Find out what deal you are on
“Did you just slide onto your lender’s standard variable rate (SVR), or do you not know how long you have left before your deal ends? Now is the perfect time to find out. If you still have time left on your deal, set a reminder so you don’t fall foul of the SVR.”
2. If you’re on the SVR, it is time to move
“Sitting on your lender’s SVR could be a costly mistake. In fact, research from Moneyfacts.co.uk shows that if a borrower was on the average SVR of 4.74%, they would be £238.83 a month worse off than if they opted for the average two-year fixed rate. With that in mind, perhaps it is time to switch to a fixed rate deal to buffer from any other future rate rises.”
3. Don’t forget to compare true cost
“When looking for your new mortgage, ensure you consider all aspects of the deal, including rate, any fees and incentives. This way you will get the most cost-effective deal for you.”
“By using the extra you may have saved by switching deals to overpay your mortgage, you could potentially be mortgage free quicker than planned. However, some mortgages have limits on what you can overpay, so check the terms and conditions before you do.”