With interest rates still at a record low, many borrowers have enjoyed low mortgage payments by remaining on a variable rate rather than move to the security of a fixed rate deal. Talk of when will be the right time to switch to a fixed deal has become a regular topic on finance websites in recent months, so with concern from the Bank of England growing, is it really time to consider making the switch?

Moving to a fixed rate mortgage deal will usually involve an increase in mortgage payments initially but the security of that fixed interest rate will shield the borrower from interest rate rises.

For 2011, experts cannot agree whether the record low of 0.5% Bank of England base rate will continue for months yet or whether the continuing rise in inflation and warnings from the Bank of England indicate the time for a rate rise is fast approaching.

The warning noises coming from the Bank of England, mortgage lenders and the government indicate that many households are already struggling to maintain their monthly repayments even whilst rates are at this low level. The decrease to 0.5% meant many households had some extra cash, whether it was because they were on tracker or variable rate mortgages that decreased in line with the reduction or because they came to the end of a current fixed rate deal and decided to remain on the lender’s standard variable rate (SVR). However, households have become used to this extra cash and if the rates increase, some experts worry about how households will fare.

Mortgage advisors and experts have always advised households to use this extra cash to overpay the mortgage but not everyone took this advice.

The general advice now is that if you are struggling as a borrower already, then the time is probably right to consider fixing your mortgage – this will probably mean paying out a little more now, but this extra would be much higher or perhaps impossible if the action is delayed.

You need to check with your mortgage lender how much your interest rate currently is – many existing borrowers do not know. Alternatively, speak to a mortgage advisor or even use an online mortgage calculator to work out how much your payments would grow to if the interest rises by just 1%. This will help you understand the impact of a rate rise. If you cannot sustain even a 1% interest rate rise, then the time is certainly right to switch to fixed. Shop around and use a qualified mortgage advisor to ensure you get the best mortgage deal and best interest rates available to you.

Those studying for their CeMAP exam now, with a view to working as a mortgage advisor, will no doubt find that remortgages are in high demand when the base interest rate inevitably rises.

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