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What impact will future interest rate increases have on your mortgage?

As the Bank of England has recently increased interest rates, thoughts are slowly turning to how borrowers can manage any future rises.

The impact of interest rate increases will depend largely on the type of mortgage deal you have. For instance, if you are on the lender’s Standard Variable Rate, you will pay the extra cost immediately. If you have deal with a fixed rate, you won’t pay the extra until the deal has come to an end.

The first step for any homeowner who wants to prepare for any future rate increases is to check with their lender which type of mortgage they have, what the interest rate is and when the current deal will end.

Once you know the type of mortgage, current interest rates and other information, you will be able to calculate how much another interest rate increase will cost you. Once this is done, work out whether you can afford this. If you will be unable to afford the extra cost, look at budgeting and cutting costs so that you can make the monthly mortgage payments.

Speak to a CeMAP mortgage advisor so that you know that you are on the best deal. Just switching to a better deal with a lower interest rate can make a huge difference in repayment costs. However, you may want to check the cost of upfront costs like mortgage fees, as they can add onto the overall cost. Preparing now for future interest rate rises will help you to avoid problems with affordability later on.

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