Negative Interest Rates - What does that mean for Mortgages?
As of todays date, the Bank of England Base rate is at it’s historic low of 0.1%
If the rate moves into a negative figure, those on variable rate mortgages that are linked to the base rate could see the unusual scenario of their bank technically obliged to pay them interest on their mortgages.
In practice, however, history suggests that negative rates tend only to be passed on to savers, while mortgage borrowers see no benefit. This is because built into the mortgage contract, there is a “floor” on how low the rates can go.
In the aftermath of the credit crunch, this was the case for a small number of mortgage borrowers, who simply didn't have to pay interest at all.
Those on fixed rate mortgages will not see any changes to their payments whilst they are in a fixed rate term.
If you are coming to the end of a fixed rate term take this opportunity to review your mortgage options and make sure that your new deal suits your personal circumstances, as these may have changed since you took you first took out your mortgage or last remortgaged.
If you’re considering remortgaging ahead of your fixed-term mortgage ending, you need to take into account any Early Repayment Charges (ERC). If these charges are less than the savings you could make, it could be worthwhile switching to a better deal.
It is best to start looking 6 months before your current one expires. This gives you plenty of opportunity to review your options and avoid you possibly paying a higher rate if you reverted onto the Standard Variable Rate (SVR).
If your current deal is due to finish in the next 6 months (or has already ended) and would like us to explore your options, we would love to help.
We can assist with first time buyers, re-mortgages, home movers, buy to let mortgages, commercial mortgages and equity release (both via referral to a master broker) and more.
For more in depth information, please contact us or call Rachael on 01323 436680 and book a FREE initial consultation today.
**Your home may be repossessed if you do not keep up repayments on your mortgage**