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Interest rates rises could be coming soon

Tuesday, 3rd May, 2016

Interest rates have remained very low for several years now. However, Bank of England could announce a rise in the Base Rate, and if that happens, for most people, it would increase their monthly mortgage payment. What's more, there may be several such rises implemented in the coming months and years.

That's why it is really important you start putting measures in place now to ensure you would be able to afford higher repayments.

How much more might you have to pay?

No one knows when the Bank of England will raise interest rates, by how much, or how often. This chart indicates what a range of different rises in interest rates might mean to a typical customer.

Here is an example of the effect of different rate rises on a typical Interest Only mortgage:

Mortgage balance ....................... £115,000
Term remaining .......................... 15 years
Current rate .................................. 2.50% (Standard Variable Rate)
Current monthly payment .......... £239.58

Rate Rise                                               Rise in Monthly Payment

0.5% ...................................................... £47.92
1% ......................................................... £95.83
2% ......................................................... £191.67

Here is an example of the effect of different rate rises on a typical Repayment mortgage:

Mortgage balance ........................ £89,000
Term remaining ............................ 15 years
Current rate ................................... 2.50% (Standard Variable Rate)
Current monthly payment ........... £593.44
 
Rate Rise                                              Rise in Monthly Payment

0.5% ..................................................... £21.18
1% ........................................................ £42.80
2% ........................................................ £87.40






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