Media alert: How to prepare for interest rate rises
Friday 17 July 2015
With talk of potential interest rises hitting the media, our Money Expert Andy Webb has put together some handy tips to help you out if you’ve got a mortgage.
Andy Webb, Money Expert for the Money Advice Service says: “It’s impossible to know exactly when interest rates might increase and predictions often change from one month to the next. Although rises are likely to be gradual, they could affect anyone with a mortgage so it is worth taking action now to get ready.
1. Find out how much your mortgage repayments will increase by
It’s worth looking at what the changes would mean to your mortgage rate and monthly payment. Check with your lender if you’re unsure. You can also use our Mortgage calculator to work these figures out.
2. Find out how much you can afford to repay
Now is a great time to update your budget to consider what money you have coming in and what will be going out each month. This will tell you how much you have left over to cover any unexpected costs or interest rises. Check out our simple Budget planner tool which can help you do all of this.
3) Making more of your money
Now you’ve sussed out how much money you have left each month, it’s worth thinking about how you can make this go further to cover the extra you will need to pay. There are lots of easy ways to cut back on spending. You could try switching suppliers to get a better deal or switch bank accounts to get a better interest rate. You could also think about making your daily coffee at home or cancelling subscriptions that you no longer use. Our Quick Cash finder - will help you find areas where you can save.
4. Explore your mortgage options
If you are on a variable rate mortgage this would be a good time to explore fixed rate mortgage deals to see if you can take advantage of the low rates. This would give you the security of knowing how much money is being repaid each month, however mortgage fees may be more expensive. Always look at the total amount to be paid back over the full term of the mortgage. If your variable rate deal is due to come to an end soon then you might be better off sticking with your current deal so make sure you research the best option to suit you.
If your home value has increased, it may mean your loan-to-value (LTV) ratio has also increased. This could mean you can choose from more lenders and lower rates. LTV and more remortgaging tips are explained in our remortgaging to cut costs guide.”
Notes to Editors:
For more information or interviews with Andy Webb, please contact: Chris Bull/Kerry McGee at 3 Monkeys: 020 7009 3100/ firstname.lastname@example.org or Jo Smith on 020 7943 0593 / email@example.com
About the Money Advice Service
The Money Advice Service is an independent organisation which gives free, unbiased money advice online (moneyadviceservice.org.uk), over the phone (0300 500 5000, and face-to-face right across the UK. Originally set up by government, it is paid for by a statutory levy on the financial services industry. Its statutory objectives are to enhance the understanding and knowledge of members of the public about financial matters (including the UK financial system); and to enhance the ability of members of the public to manage their own financial affairs.