Around two million people have never had to deal with a rise in interest rates, as they have enjoyed some of the lowest mortgage rates to exist for many years. Although around 50 per cent of borrowers are expecting to struggle when the Bank of England base rate increases, are they taking steps to prepare for the extra cost?

Although a number of borrowers may initially panic about an interest rate increase, especially if they are already struggling, economists suggest that the increases to the base rate will be gradual. Following the financial crisis in China, some believe that it’s possible that the interest rates will remain static. However, it is likely that at some time during the term of your mortgage you will have to face higher interest rates and larger monthly payments. Taking action now may help to cushion the blow when it does finally occur.

The first option is to consider whether you could re-mortgage to a lower fixed rate deal so that you can enjoy the benefits of a low interest rate whilst being able to budget. This obviously isn’t possible if you are already tied into a deal, so in that case, you could recalculate your household budget. Look at different ways to cut monthly spending so that you have surplus income each month. If you believe you may struggle to meet repayments, or you would like to re-mortgage, contact a financial adviser who has been on a CeMAP course in Birmingham, Leeds or Liverpool and has the relevant knowledge to be able to help.

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