If you’ve been sitting on your mortgage lender’s Standard Variable Rate (SVR) then you could be unknowingly wasting thousands of pounds. With the Bank of England keeping its base rate at an all-time low, many believe they’re on the lowest repayment they could have but not in all cases, according to a report in The Independent this week.

According to this report, not all lenders have a competitive SVR and for many, there are some cheaper tracker and fixed rate deals out there. Before you grab your calculator however, remember to check all the costs associated with the mortgage deal rather than just looking at the headline interest rate.

Many experts believe that after 22 consecutive months at the all-time record low of 0.5 percent, the Bank of England is highly likely to raise the interest rate now that inflation has increased to 3.7 percent. Those with variable rate deals who has concerned about the effect of any rises should look at remortgaging to a fixed rate deal to insulate themselves from any rises during their fixed rate period.

There is a sense of urgency about moving to a fixed rate deal though, as mortgage lenders are also finding the rates they themselves borrow funding at are also rising, meaning the fixed rate deals may also become more expensive.

According to moneysupermarket.com a borrower with £150k outstanding on a 25 year repayment tracker deal at 2.17 percent now pays around £648 per month. Just a 0.25 percent increase would push that repayment up by £19 per month.

A CeMAP-qualified mortgage advisor will be able to help you to compare the different mortgage deals open to you, taking into account any additional fees or products, so you can find the right deal for your circumstances.

One Response

Leave a Reply

Your email address will not be published.