I’m worried about the possibility of yet more increases to the interest we’re paying on our variable rate mortgage. We’re finding it quite hard at the moment. With our family's energy, food and petrol bills going through the roof, we’ve got no spare cash. We’ve had this mortgage for eight years now – can we change to a fixed rate deal?
Diane Fish of Smith & Pinching responds:
It certainly looks like the Bank of England base rate may go up again in the months ahead as they attempt to combat inflation. This will mean that a variable rate mortgage is likely to become more expensive. Unfortunately, the rise in the base rate does mean that many new fixed rate mortgages are also more expensive than they’ve been in the past.
However, it may well be possible for you to move to a more attractive mortgage deal, depending on your circumstances. A fixed rate on offer now may well be a lot better than a variable rate later if overall interest rates climb much higher over the next couple of years.
Lenders are feeling quite cautious at the moment, so you will need to meet their affordability criteria to qualify for a new deal. We’d need to look at the equity you have in your home, your ages, incomes and normal expenditure, for example. We also shouldn’t rule out staying with your current lender as they may consider a product transfer to one of their fixed rate products, depending on the terms you currently have in place. This should potentially be compared to what’s on offer from the rest of the mortgage market.
You could research all the available mortgages yourselves, of course, but I do think you would benefit from getting advice from an independent mortgage adviser. The adviser will have his or her finger on the pulse of the market and will know how to find the best deals now and may have access to mortgage offers that are not available to the general public. In reality, trying to source the whole of the mortgage market as a private person would be very difficult, if not impossible.
Your home may be repossessed if you do not keep up payments on your mortgage. We do not offer deals that you can only obtain by going direct to a lender. There will be a fee for the mortgage advice. The precise amount will depend upon your circumstances, and the type of lending taken. Smith & Pinching’s minimum advice fee is £950. Any opinions expressed in this article do not constitute advice.
For more information, please visit www.smith-pinching.co.uk
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