How to survive the interest rate increase

November 7, 2017 by Brendan

Advice & Tips

If you are on a Standard Variable Rate (SVR) mortgage, it is likely that you are paying thousands more each year than you need to. By securing a fixed rate product, you could save money every month, and thousands over the term of the deal.

As the Bank of England has increased base rates by 0.25% to 0.5%, your mortgage payment is likely to increase if you are paying the SVR, or are on a tracker deal.

Check your current mortgage deal, and if it’s a variable rate, consider moving to a new product. Try a comparison tool to find some of the best deals. However, once you have found a good deal, you then need to be accepted and approved by the lender, which isn’t always as easy to do.

Lenders have differing criteria for lending, so while you may be rejected by one lender, you could be approved by another. Seek help from a mortgage advisor, as they gain insight into lenders through CeMAP training.

Prior to applying for a new mortgage deal, take some time to check your credit report, and correct any information which isn’t accurate. If you have lots of credit, consider paying as much off as possible to increase your chances of being approved by the lender.

In addition to checking your credit report, a lender will also apply the stress test. This is used to see whether you would be able to afford the mortgage repayments if they increased to around 6 or 7%. Although interest rates are still low, they could increase again in the future, so making sure you can afford repayments is advisable.