Should you fix your mortgage rate?
Possibly the $64,000 question – there is, unfortunately, no straight answer.
The Bank of England recently increased interest rates for the first time in over a decade, and there are more on the horizon. Whilst a fraction of a percentage is a seemingly small increase, the impact on your mortgage monthly payments can be significant over a long period. If the market looks set to increase (even if there are no guarantees), a fixed mortgage will give you peace of mind and a level of certainty around your finances that you may not get if your mortgage is on a Standard Variable Rate or tracker mortgage.
So, why should you change to a fixed-rate mortgage?
With the recent rate rise, those with a standard variable mortgage or tracker mortgage will see an increase in the monthly cost for their mortgage. They will have received a notification from their lender advising them of the increase – but increased payments could be a struggle.
Those on fixed-rate mortgages will have received no such notification – because their mortgage is fixed for the term originally signed up for. Thus Bank of England rate increases do not affect them.
However, it should be pointed out that the same applies in the event of an interest rate decrease. Those on a fixed-term mortgage would not benefit from a reduction in interest rates for the term that they agreed on upfront.
Choosing the right mortgage with the appropriate interest rate can help save you money – but it is an informed choice. The wrong decision could be very costly and whilst working with a broker will not guarantee that interest rates won’t increase during the life of your mortgage – you’ll be working with experience that will give you the best possible choices based on the likelihood of interest rates rising.
To find out more about mortgage rates or if you’d like to speak to an independent adviser about your current mortgage rate, contact us today on 01639 26222 or send us an email via this link.
Your home is at risk if you do not keep up to date with your mortgage payments or other loans secured on it.