Stay on Top of ris­ing in­ter­est rates

The Oban Times - - Business - with Iain Cairns

Higher in­ter­est rates may be wel­comed by savers but they spell bad news for bor­row­ers. Any rate in­crease will drive up monthly re­pay­ments for those mort­gage hold­ers who do not have a fixed mort­gage rate and, while those who have fixed their mort­gages will not feel the ini­tial im­pact of a rate rise, when their fixed pe­riod comes to an end, re­mort­gag­ing is likely to re­sult in a sig­nif­i­cant in­crease in monthly re­pay­ments. Lower in­ter­est rates – and, more specif­i­cally, lower gilt yields – have en­sured mort­gage rates have re­mained rel­a­tively de­pressed for some time now but they have dropped even fur­ther in the years since the fi­nan­cial cri­sis. While no-one is pre­dict­ing a speedy spike in in­ter­est rates – there is still too much debt around and eco­nomic growth re­mains frag­ile – bond mar­kets will an­tic­i­pate in­ter­est rate rises ahead of the event and, by the time they have risen, it may be too late to lock in lower yields. Any­one tak­ing out a mort­gage should al­ways as­sess not only whether they can af­ford their re­pay­ments now, but also whether they would be able to af­ford them in an en­vi­ron­ment of higher in­ter­est rates. Al­though rates are not ex­pected to rise as far or as quickly as be­fore the fi­nan­cial cri­sis, even a rel­a­tively small in­crease could have a rel­a­tively sub­stan­tial ef­fect on your monthly re­pay­ments. If the terms of your mort­gage al­low, it may be worth con­sid­er­ing over­pay­ing on your mort­gage while rates re­main low. It may also be worth ne­go­ti­at­ing a new mort­gage now – per­haps mov­ing from a stan­dard vari­able rate to a fixed rate. That said, mort­gage lenders are al­ready poised to im­ple­ment a rate in­crease once it takes ef­fect and are there­fore likely to take ac­count of this when of­fer­ing an­other deal. Make sure you check the terms of your cur­rent deal – you could in­cur penal­ties from your cur­rent lender if you switch to a new one – and, above all, do take ex­pert ad­vice. Ar­gyll Fi­nan­cial Ser­vices lim­ited help many in­di­vid­u­als and busi­nesses through­out Ar­gyll on a wide range of mort­gage and fi­nan­cial plan­ning needs. Con­tact us on 01369706198 or info@ ar­gyll­fi­nan­ to help us se­cure your fi­nan­cial fu­ture. The pur­pose of this ar­ti­cle is to pro­vide tech­ni­cal and generic guid­ance and should not be in­ter­preted as a per­sonal rec­om­men­da­tion. It rep­re­sents our in­ter­pre­ta­tion of cur­rent and pro­posed leg­is­la­tion and HMRC prac­tice as at the date of pub­li­ca­tion. Th­ese may change in fu­ture. Ar­gyll Fi­nan­cial Ser­vices Ltd are au­tho­rised and reg­u­lated by the Fi­nan­cial Con­duct Au­thor­ity. Buy to Let Mort­gages are not reg­u­lated by the Fi­nan­cial Con­duct Au­thor­ity. There may be a fee for mort­gage ad­vice. Typ­i­cally this will be £199. RE­MEM­BER – YOUR HOME IS AT RISK IF YOU DO NOT KEEP UP RE­PAY­MENTS ON YOUR MORT­GAGE

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