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Does the Bank of England base rate affect my mortgage?
With the increase in the cost of living and the Bank of England base rate rising it’s more important than ever to save where you can. And whether you’re on a fixed or tracker mortgage it’s important to know how the rising base rate could affect your monthly mortgage payments.
What exactly has changed?
According to the UK government the cost of living has risen considerably - by roughly 5.5% compared to January 2021. One main area where costs have risen for households is how much we now have to spend on our energy bills – it feels a bit like paying for liquid gold! .
As well as this the Bank of England base rate has increased four times since December 2021, taking it from 0.1% to 1.25%, with experts predicting it will rise again. Each increase to the base rate makes borrowing – such as on mortgages - more expensive. While we don’t want to put a downer on your Easter break we do want to ensure you’re prepared for any changes.
If you’re worried about your finances and the increase in the cost of living our expert advice article on feeling happier about your finances may help relieve a little stress.
What does remortgage mean?
You have most likely heard of the term remortgaging but are you a little unsure as to what it means? In short it means moving your mortgage from one deal to another, this may be sticking with the same lender or moving to another one.
How will my mortgage deal be affected by increases to the base rate?
Fixed rate mortgages
The good news is that if you’re on a fixed rate mortgage your monthly mortgage repayments will not change.
However if you’re coming to the end of your deal within the next 6 month it’s a good idea to start looking for a new deal now. And we can help search for a new deal for you and ensure you aren’t paying more than you need to.
If you have a tracker mortgage your monthly repayments will rise in line to reflect the base rate increase. Your current lender will contact you notifying you of this change but you can also work this out yourself:
- The new base rate of 1.25% and,
- The set rate you agreed to in your last mortgage offer
Then use our monthly repayment calculator to help work out what the cost will be each month.
Now may be a good time to switch to a fixed rate mortgage deal to give your more stability, again we can review your deal and help keep monthly repayments low.
Standard variable rate
If you’re on a standard variable rate (SVR) you’ll need to check with your lender what the rate has changed to. Your monthly repayments will be affected by the lenders decision.
We understand times are expensive at the moment! Here at Mortgage Advice Bureau Portsmouth we have a team of mortgage advisers to help ensure you’re making the right decision when it comes to you and your mortgage.
Get in touch with us here to discuss all your possible remortgage options.
Because we play by the book we want to tell you that…
Your home may be repossessed if you do not keep up repayments on your mortgage.
There may be a fee for mortgage advice. The actual amount you pay will depend upon your circumstances.
The fee is up to 1%, but a typical fee is 0.3% of the amount borrowed.