Many homeowners have been benefiting from historically low Bank of England Base rates over the last decade.
These low interest rates have helped many to either buy homes or continue to live in their homes during several years of uncertainty and ‘budget-tightening’.
In addition to low interest rates, many mortgage lenders have been offering borrowers discounted interest rates during the first few years. The argument is that new homeowners are cash poor and an initial low rate helps them to pay for all the costs associated with buying a new home. Unfortunately, these initial rates will, eventually, come to an end and when they do the cost of your mortgage may change - sometimes dramatically.
The same is true of capped or fixed rate deals where interest rates might have been set at a certain figure, which will revert to a known variable (such as the Bank of England Base Rate or the lender’s Standard Variable Rate) at the end of the fixed rate period.
All of the above mentioned indices are largely linked, in reality, with most lenders setting their SVR (Standard Variable Rate) a little higher than the Base Rate of the Bank of England. However, the SVR for each lender may be more or less competitive and as such it’s worth shopping around whenever your rate reverts to the lender’s SVR.
Tracker mortgages that are linked to indices like the current Bank of England Base Rate or LIBOR tend to be more predictable as both indices are published regularly and are set, either by the Monetary Policy Committee of the Bank of England or by the major banks in the case of LIBOR.
Many lenders will notify you when your fixed term is due to end, but some may not. If you arranged your mortgage through a Mortgage Adviser, it is likely that they will be in touch before your fixed rate finishes so that they can search the market for a new mortgage product for you.
If your property has increased in value since you took your mortgage you are likely to obtain a more favourable rate.
If you have more disposable income than before, you may qualify for a deal that you could not previously secure.
We recommend that you always take professional independent advice from a mortgage broker who can look into these factors for you when considering a change in your mortgage provider.
Contact us today on 01628 507477 to speak to an advisor.
Download our Free First Time Buyers Guide
Recent posts
The Equity Release Council has revealed that three in five UK homeowners are interested in releasing money from their property later in life.
Prices for UK houses drop in July 2024
9 days ago
The average seller’s asking price dropped by 0.4% in July, a bigger drop than we have typically seen.
We explore the differences between Millennials and Gen Z and what both generations ideally want from a new home.
Overpaying mortgage vs money into savings
18 Jun 2024
Should you overpay your mortgage? If you can put extra cash away you need to seriously consider whether you should pay more off on your mortgage or put it into a savings account.
Buying a property, especially in the current climate, is a big decision for first time buyers. We have listed a few tips that can help you buy your first propertyy
Does the time of year make a difference in house purchases? The answer is, yes and no.
The popularity of buying a house can vary depending on various factors such as regional trends, how the economy looks, and of course personal circumstances.
6 Garden Tips to Add Value to Your Property
30 Apr 2024
If you are looking at putting your house on the market, you may want to consider giving your garden some TLC. Small changes can make your outside space a lot more attractive to potential buyers resulting in a faster sale.
Averages for a first time buyer in the UK
24 Apr 2024
Getting on the property ladder is a big milestone in life, and is not something to take lightly. There are several things to take into consideration such as saving up for a deposit, finding your dream home, and finding the best mortgage product to suit you. Here we look at UK first time buyer statistics.
More information
Trusted by
