If you’re among the two million borrowers whose mortgages are on a standard variable rate (SVR), the Bank of England’s recent base rate rises might be causing you concern.
People able to switch their mortgage, or whose fixed rate deals are ending shortly, can save as much as £200 a month - or £2,000 annually - by shopping around, according to The Guardian
Amid the many rising costs currently impacting on householders, “mortgages are the one aspect of good news here, because there is still something you can do about the cost,” says David Hollingworth of broker L&C Mortgages. “You can ease the pressure elsewhere by taking appropriate action.”
To see if this might be true for you, first understand the mortgage deal you have. Be clear on the rate you are paying; whether it’s a time-limited special deal, and the fees for an early redemption.
While some lenders have not passed the base rate rise onto their customers, many people on the SVR have already seen their payments increase following the Bank’s December increase. Not all SVRs are the same, and you could make savings by moving from one variable rate to another.
Anyone with a tracker mortgage will feel the effect of an interest rate rise - a concern, with predictions that the base rate could reach 1.5% next year. If your mortgage doesn’t come with early repayment charges, you should consider a switch, unless you need a flexible loan because you plan to pay it off early.
If you do have early redemption fees to pay, work out whether these could be covered by the savings you’ll make in monthly payments.
For people worried about future interest rate rises and mortgage affordability, the cost of a ten-year fixed-rate is falling, with lenders offering rates of under 2% for 60% loans.