Looking at the bank’s current situation, it is safe to say that we cannot put all our trust in the interest rates. The base rates have experienced a hike since December 2021, which continues till date. As of August 2023, the base rates for the Bank of England have risen by 5.25%, which is noted to be the highest rise in the last 15 years.
The Sharp Unpredictable Rise in Interests:
The base rate of the Bank of England is important as it determines the interest rates of other banks. So, no matter where you plan to take your mortgage, you would have to pay a higher interest. To get a better explanation of this, you must contact your mortgage advisor in Market Deeping.
How Does Change in Interest Rates Affect Your Mortgage?
Here’s more about the implications of a base rate rise for different types of mortgages.
- Fixed-rate Mortgage: If you are on a fixed-rate mortgage, you need not worry much about the base rate increase. The monthly repayment and final mortgage rate will remain unchanged for the agreed period. However, once the fixed term ends, you will automatically be moved to your lender’s standard variable rate. This rate is supported by the base rate change of the Bank of England.
- Repayment Mortgage: This is also known as an interest-only mortgage, where you only have to repay the interest on the loan. It frees you from the burden of repaying the capital. In this type of mortgage, you are expected to repay the full amount at the end of your term. Due to the base rate change, you may have to pay a higher amount of interest.
- Discounted or SVR Mortgage: SVR Mortgage, also known as standard variable rate mortgage, is a deal that offers a fixed discount. If the standard variable rate is more than 5%, you may get a discount of 1%. However, the change in the interest rates would affect your mortgage significantly. Your mortgage repayment rate may change at any time, as it is highly affected by the changes in bank rates.
You must invest in a mortgage upon judging all these three factors properly. To get professional assistance, it is important to contact a qualified mortgage advisor in Market Deeping. Get in touch with David List Mortgage Consultants Ltd, one of the well-known sources in this field. We have considerable experience in guiding people with mortgage basics. For more information, you can visit our website today.