Pembrokes -New Mortgage?

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Tuition without Competion AVERAGE STANDARD VARIABLE RATE REACHES A 13-YEAR HIGH. IS IT TIME YOU LOOKED FOR A NEW MORTGAGE DEAL?

If a previous mortgage deal has ended and you’ve not taken out a new one, you could be paying a much higher rate of interest.

When you take out a mortgage, the deal is for a fixed period, often two, three or five years. After this period, you’ll normally be moved on to your lender’s SVR. While this can provide more flexibility – you may wish to make overpayments, for example – the interest rate you’re paying is unlikely to be competitive.

The average standard variable rate for June 2022 reached 4.91%

To tackle rising inflation, the Bank of England (BoE) has increased its base interest rate several times this year. Changes to the base rate affect the cost of borrowing, including mortgages. If your mortgage isn’t fixed-rate, you’ve likely already noticed that your repayments have started to increase. As SVRs are usually higher than other types of mortgage product, homeowners that haven’t searched for a new mortgage deal could find they’re paying much more in interest than they need to. According to Moneyfacts, the average SVR in June 2022 reached 4.91%. This is the highest recorded since February 2009. Rates can vary significantly between lenders, so you should check how much interest you’re paying and how it affects your outgoings. Even a small difference in the interest rate can save you money each month, and this adds up over the full term of your mortgage. The below table highlights how the interest rate affects finances for a £250,000 repayment mortgage with a term of 25 years.

Interest rate Monthly repayment Total interest paid

3% £1,185 £105,597 4% £1,319 £145,712 5% £1,462 £188,600 6% £1,611 £233,324

Source: Money Saving Expert

So, if you’re paying your lender’s SVR, finding a new mortgage deal could save you money now and in the long term.

As interest rates climb, should you choose a fixedrate mortgage?

If you’re on your lender’s SVR, the interest rate you pay is variable. This means it can rise and fall each month. At a time when interest rates are slowly rising, choosing a fixed-rate mortgage can make sense for some people. While the interest rate on a fixed-rate mortgage is likely to be initially higher than the alternatives, it will remain the same for a defined period, such as two years. This can make managing your budget easier.. Please contact us on 01273 774855 or email advice@pembrokefs.co.uk if you would like more information and quote reference PFSIS.

As a mortgage is secured against your home or property, it could be repossessed if you do not keep up mortgage repayments. Think carefully before securing other debts against your home. Equity released from your home will be secured against it. Your home may be repossessed if you do not keep up repayments.

T. 01273 774855 Marlborough House, E. advice@pembrokefs.co.uk 102-110 High Street, W. www.pembrokefinancial.co.uk Shoreham-by-Sea BN43 5DB Keith Relf & Keith Bonner - Managing Partners