What happens to my mortgage following today’s increase in the Bank of England Base Rate?
What Happens to My Mortgage Following Today’s Increase in the Bank of England Base Rate?
Tracker Rate
If you’re on a base rate tracker your rate will also go up by 0.25%. Your lender will notify you of this change in writing within the next 2 weeks and the letter will inform you of what your new payment will be, which will generally start the following month. If your concerned about this increase then you could look at fixing your mortgage, as most base rate tracker mortgages have no early repayment charges (please check your offer as some do), and some lenders offer a ‘switch to fix’ facility.
Fixed Rate
Most UK borrowers are on fixed rate mortgages and there will be no immediate change to your mortgage rate or payments, though you should prepare for higher rates when you’re fixed rate ends. If you’re fixed rate is ending within the next six months we recommend that you review your options right now as you can book re- mortgage products six months in advance. Such products have no obligation to complete so if rates reduce over the next six months you can switch to a different product.
Discount Rate
Discount rates are typically offered by smaller Building Societies with the discount being a margin below the lenders ‘standard variable rate’ (SVR). In most cases the Building Society SVR is not explicitly linked to the Bank of England Base Rate so you may see no change to your payments, though some lenders may well increase their SVR’s, and if they do they will notify you in writing within the next two weeks giving advanced notice of an increase in payments the following month.
Standard Variable Rate (SVR)
You really should not be on the SVR unless you are planning to repay the mortgage in the very near future as such rates are generally very high compared to ‘market rates’. Most SVR’s are not linked to the Bank of England base rate but for those that are you will be notified in writing by your lender within the next two weeks giving advance notice of an increase in payments the following month.
Lifetime Fixed (Equity Release)
As such rates are fixed for life from the outset there will be no change to the interest charged. However, as long term UK Gilts have also increased you may find that your existing lifetime mortgage no longer has early repayment charges or has reduced early repayment charges, therefore opening up the possibility to re-mortgage on to better terms, or release additional equity given house prices have risen sharply in recent years.
What Are My Options?
If you’re current deal has no early repayment charges or your existing deal ends in the next six months then now
is the ideal time to review your options as there are still some competitive rates available. Even if you do have early repayment charges it’s still worth looking in to as in some cases the interest saving can be in excess of the penalty charge. The expert team of advisors at Jordan Lynch are on hand to review your mortgage right away. We will analyse the market comparing retention rates with your existing lender to those available across the market with other lenders. We will then provide you with a report free of charge and without obligation which highlights your options and provides detailed calculations of whether it is worthwhile paying an early repayment charge. Additionally, we will also look deeply in to your circumstances and future plans and will recommend the right product for you. This will ensure you do not fall in to a trap which results in you being tied in to a product that increases the likelihood of you paying a hefty early repayment charges in the future.
Please call or email our expert team of advisors now to review your options.
Tel: 0161 486 9316
Email: sales@jordanlynch.com