If your mortgage payments have gone up in the last year, you’re not alone.
Since December 2021, the Bank of England (BoE) has raised the base rate 11 times, with the rate standing at 4.25% as of April 2023, compared to 0.1% back in late 2021.
Since Kwasi Kwarteng’s mini-budget in September 2022, mortgage rates have been steadily increasing and, according to the Office for National Statistics (ONS), mortgage repayments for the average semi-detached house in the UK rose by 61% in 2022.
In addition to that, the number of mortgage approvals granted in January 2023 sank to its lowest level since the financial crash of 2008, following a downward trend lasting five months.
So, if your mortgage repayments have risen in recent months, or you’re concerned about what will happen when your current deal ends, here are three options you can consider.
1. Review your tracker- or variable-rate mortgage today
With the BoE regularly increasing the base rate since December 2021, it’s highly likely that your mortgage repayments will have gone up if you’re on a tracker or variable rate. So, it can be worth reviewing your options to see what else might be available.
This can help you find a deal that could save you money, or possible protect you against further interest rate rises in the future.
Given that tracker- and variable-rate mortgage payments are typically tied to base rate rises and falls (although a lender can independently raise their standard variable rate (SVR)), choosing the right mortgage for you will depend on your own personal circumstances.
If you expect interest rates to fall in the upcoming months, sticking with a tracker- or a variable-rate mortgage could be the best option for you, as it might mean your repayments fall if interest rates fall. However, if you want the security of knowing exactly what you will pay for a set period, a fixed-rate deal might be more appropriate.
As an independent expert, we can help you review the options available to you. We can scour the market and help you to find the most appropriate mortgage for your needs.
2. Shop around now if your fixed-rate deal is coming to an end soon
If you currently have a fixed-rate mortgage and it’s due to end in the coming months, now is the time to start considering your options and shopping around. If you don’t act, you will likely end up on your lender’s SVR, which will most likely mean your repayments will be higher than they are now.
It’s now more important than ever to review your current mortgage deal and explore all the options open to you. You can either take a new deal with your existing lender, potentially saving you time and hassle, or switch to a new provider.
Sticking with your current provider can sometimes be of benefit. Often, it’s quicker to agree a new deal with your existing lender and it may be easier to get a deal approved with a lender that already knows and trusts you, compared to one that you’ve never dealt with before.
However, the deal your existing lender may offer you might not be competitive, and there could be other options that could save you hundreds or even thousands of pounds over the next few years.
Bear in mind that many mortgage offers are valid for six months, so if your deal ends in that window, now is the time to start investigating and researching all your options.
Due to the uncertain nature of the UK economy in 2023, Forbes has reported that many lenders are attempting to attract new customers with reduced fixed-rate deals. So, make sure you talk to us before you act, as we can advise you on all the offers available to you and help you find the right one for you – whether that’s with your current lender or a new one.
3. Run through the choices open to you with an experienced mortgage broker
When making any kind of important financial decision, it’s always wise to seek advice and guidance from an experienced professional that knows the topic inside-out. We can work with you to explore your options and find the most suitable mortgage option for you.
With interest rates rising over the last 12 months and mortgage repayments typically higher on average, it’s important to be armed with all the information you need to make the right decision if your mortgage deal comes to an end soon.
So, if your current deal is ending in 2023, speak to one of our experienced mortgage experts today. Email enquiry@edinburghmortgageadvice.co.uk or call 0131 339 2281.
Please note
Your home may be repossessed if you do not keep up repayments on a mortgage or other loans secured on it.
