The much speculated interest rate rise has been announced and as widely anticipated the Bank of England have raised the base rate from 0.5% to 0.75%. So what does a 0.25% raise actually mean for us everyday folk?
If you have one of the 9.1 million mortgages in the UK, then a rate rise could see your monthly mortgage repayments go up in line with the base rate rise. If you are currently on your lenders SVR (Standard Variable Rate) or you have a tracker or discounted rate mortgage then unfortunately your payments will be increasing and your lender will contact you shortly to confirm this.
Check your current mortgage deal ASAP and speak to an expert if you’re payments are due to rise – you could save yourself hundreds or even thousands over the term of your mortgage!
If you are on a fixed rate mortgage your current payments will not be affected, however when you come to the end of your current deal if you do not fix again, you could be paying a higher rate of interest – so remember to start looking for a new mortgage deal around 6 months before your current one ends!
If you currently have a loan you will most likely have fixed monthly payments, so these will not be affected. However if you’re in the market for applying for a new loan, it would be smart to compare rates and apply as soon as you’re able as loan rates could rise over the next few months.
The Savvy Savers
A base rate rise should be good news for savers, as it means you could get more interest on the money you have tucked away in a savings account or ISA. However when the base rate was increased in November from 0.25% to 0.5%, banks were slow to pass this on to their customers.
Keep an eye out for banks offering higher savings rates as a result of today’s announcement and if you can switch your pennies without a penalty on interest already earned, then you might be wise to make the move.
If you would like to discuss your mortgage in more detail, speak to an adviser today who can find out if you could be paying less on your monthly mortgage repayments.
The above post is intended to be informative but does not constitute advice – financial, legal or otherwise. Any opinions given are the author’s own and do not necessarily reflect the views of SO Media.
THINK CAREFULLY BEFORE SECURING OTHER DEBTS AGAINST YOUR HOME. YOUR HOME MAY BE REPOSSESSED IF YOU DO NOT KEEP UP REPAYMENTS ON YOUR MORTGAGE.