There is a lot of noise being made at the moment about the rise of interest rates. The base rate (set by the Bank of England) has increased in recent months and is predicted to rise further. But what does this mean for your mortgage interest rate? Well, if your current mortgage deal is due to end in the next year or so, you will need to be ready to make sure that you secure the best possible rate for your next product. Help is at hand and, rest assured, there are plenty of options available. Here’s how we suggest you keep on top of the situation and put yourself in the best possible position.
1) Keep an eye on your current rate
It’s really important to know exactly when your current mortgage interest rate is due to expire. You don’t want the date to pass by without researching the market for a new deal otherwise you may be automatically transferred to a new rate (usually higher).
In a nutshell, preparation is key. Be poised and ready to go.
2) Get the timing right
You can usually transfer to a new mortgage product (potentially with a new lender) up to 6 months before your current rate ends so it’s worth getting in there early in order to take advantage of lower interest rates before they start to increase further. It can be well worth using the services of an experienced mortgage advisor as they will be able to advise you on the best products for your individual circumstances. Make sure you use a ‘whole of market’ advisor as they won’t be tied to any specific lenders.
Tip! Don’t forget to factor in any Early Repayment Charges (EPC) that may apply.
3) Consider a fixed rate mortgage
Fixed rate mortgages mean that you are locked in and protected against mortgage interest rate rises so no matter what happens with the Bank of England base rate, you still pay the same amount until the end of the agreed term. Remember that the fixed rates available today will not be around for long. The rates that are available are constantly changing and increasing so it is better to act quickly to get a fixed rate at current levels rather than missing out by leaving it too long.
4) Get a valuation
It may be that you have done some work to the property since you purchased it, or you may be lucky enough to be living in an area that has benefitted from recent growth. Get a few estate agents round to value your property. This won’t cost a penny and could prove to be extremely useful. Any increase in value will have pushed up the amount of equity that you own. (Equity is the proportion of the value of the property that you own as opposed to the proportion that you are paying for as a mortgage). If your equity has increased you have a lower loan to value and might be able to obtain a more competitive interest rate as a result
5) Don’t just accept the offer your current lender gives to you
If you have left it a bit later than necessary then all is not lost, but don’t just accept the offer from your current lender as a good whole of market adviser might be able to source better terms for you and make a bigger saving = more money for you!
Hopefully this will have given you some useful pointers to ensure that any mortgage interest rate rises won’t send you into a flat spin! Get organised, understand the market and get some solid advice – you should be fine!
Hudson Rose are the mortgage advisors that don’t look (or feel) like mortgage advisors! We are always very happy to help, even if its just to have a quick chat through your situation. Feel free to give us a call any time – 0330 122 9920
