Mortgages: switching could save £200 a month as interest rates rise
Unless your mortgage is already fixed for the long term, this week’s interest rate rise, following hot on the heels of December’s, is likely to have given you cause for concern. About 2 million borrowers are on variable rate deals of some kind, and many have already seen an increase in their repayments following the last base-rate rise. Thousands more are on fixed-rate deals that come to an end over the next few months.
With other living costs rising, remortgaging might be a good bet. Some people will be able to save more than £200 a month, or in excess of £2,000 a year, just by making a fairly simple switch.
“Mortgages are the one aspect of good news here, because there is still something you can do about the cost,” says David Hollingworth at the broker L&C Mortgages. “You can ease the pressure elsewhere by taking appropriate action.”
What “appropriate action” is, will depend on your circumstances, but you should, at least, start with a look at your current situation.
Are you paying your lender’s standard variable rate (SVR), and, if so, how much is it? Are you on a special deal of some sort, and, if so, when does it end? If you jump ship early, are there any redemption charges to pay? These are fees that a lender charges when you pay off your mortgage before the end of a special offer rate, and are usually equivalent to a set percentage of your outstanding mortgage debt.
It is likely that you have just been hit with an increase in your monthly bill linked to December’s Bank of England decision, and you now face another 0.25 percentage point rise.
But not all borrowers are facing higher costs yet. HSBC is one large lender that has not passed on the increase, and Yorkshire building society has held its SVR, too.
The SVRs of
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