Rates are currently low and not for long. Interest rates seem to be creeping up slowly and there’s no saying in when it will stop. This is due the banks having noticed the uncertainty of the current economy. The banks have started to take precautions and it appears that the downward trajectory of the interest rates has come to a stop. Although interest rates are still currently low there is no certainty in whether they will stay low and for how long.
Currently you could be entitled to get a remortgage with an interest rate as low as 1.39%. Assuming your loan outstanding is £200,000, your monthly payment turns out to be approximately £790. In the mid 2000s the bank of England base rate rose to 5.5%. Usually if you had a tracker mortgage it is a certain percentage plus the bank of England base rate. So even if the interest rate was 6%, this increases your monthly payment to £1,289. Essentially that is £499 increase in the monthly payment.
There are few precautions you can take to avoid volatile interest rates having an impact on your monthly mortgage payment and keep it as low as possible:
- If you are currently on the standard variable rate or coming to the end term of your product, the interest rate is at the discression of the lender. Due to the uncertainty of the current situation with Brexit, you could fix in your rate in with your current lender as the interest rates are still currently low.
- Like for like remortgage; where you can remortgage your loan outstanding with another lender offering lower interest rates. However if you are currently fixed in with another lender there could be penalty charges to be paid when redeeming your loan.
- Remortgaging with capital raising, where you could remortgage your loan with another lender and also take out some equity you have in your home. For a new venture or even buy another property.
Product transfers and remortgaging could save you thousands over the course of your term. Do not hesitate to contact the team today at Rosebank mortgage brokers to see if you can save money on your mortgage today.