• Mortgage Tree

I’m a mortgage holder – what do I need to know in light of the recent BOE base rate increase?

Updated: Aug 28, 2018

If you’re on a fixed-term mortgage you won’t see any immediate change – though if your deal ends soon, the one you move to may cost more.

If you’re on a standard variable rate (SVR) or ‘discount’ mortgage, your mortgage is likely to rise by 0.25%, as most loosely follow the base rate. Such a jump could cost £180+/yr more per £100,000 of mortgage. However SVRs are set by individual lenders so you’ll need to check what yours is doing and when any changes will come into effect. About a quarter of mortgages – roughly 1.8 million – are on an SVR.

If you’re on a tracker mortgage your rate will definitely rise by the same amount as the base rate – 0.25%. Exactly when this happens will depend on your lender though – some have already put them up, while others have said they will increase in September. Roughly 1.3 million mortgages are trackers.

The key points for mortgage holders are:

  • If you’re on your lender’s standard variable rate, you’re likely massively overpaying. The average SVR is 4.24%, yet the top two-year fixed mortgage right now is just 1.35% – the difference in cost is over £2,500 per year on a typical £150,000 repayment mortgage with 25 years remaining. Even with switching fees you’d likely make a massive saving.

  • If you need to remortgage, this could be a unique window of opportunity. If you’re looking to get a better deal for your existing mortgage, it’s worth looking ASAP – as rates may be about to rise. The rates of the best new fixed deals have already started creeping up in the last few months – likely because lenders set them based on City swap rates (long-term predictions of interest rate trends), which have been pointing upwards.

Here’s what to do now if you’re a mortgage holder:

1.Dig out the details of your current mortgage.

Find the rate, if it’s fixed or variable, when the intro deal ends, what the term is, if there are early exit penalties, and crucially work out your current loan to value – the proportion of your property’s value you’re borrowing.

2.Contact Mortgage Tree and we will check if you’re eligible. What matters is if your credit score is good, if you can afford repayments and if you meet the lender’s criteria.

3.We at Mortgage Tree will then benchmark the best deal for you and show you what your monthly/annual savings will be.

Give Mortgage Tree a call now, we’ll be happy to help.

Here's what our clients say...

“Mortgage Tree showed me how to improve my credit rating as I had a few issues with my credit previously. As a result of their excellent advice I have now secured a mortgage at a great interest rate. They also helped me sort out life & critical illness cover which offers great protection for myself and my family. Mortgage Tree offers a fantastic service and I recommend them wholeheartedly.”

Charlotte - Leeds


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Mortgage Tree - Mortgage Advisors York - Services & Standards

Mortgage Tree offers a nationwide mortgage broking service from our base near York, North Yorkshire. We specialise in mortgages and insurance. Whether you are a first time buyer or you are a buy to let investor with multiple properties, Mortgage Tree will ensure that you get the best products available.

We are a Whole Of Market broker which means that we will choose the best, most suitable mortgage for you from the hundreds available on the UK mortgage market. Our network also gets special discounted deals from lenders available only to our network.

We also provide insurance cover that will give you & your loved ones a blanket of protection that is so vital. We will endeavour to give you the best service that we can at all times.

Mortgage Tree is an appointed representative of Julian Harris Mortgages ltd which is authorised and regulated by the Financial Conduct Authority. Our FCA no. 304155

The Financial Ombudsman Service (FOS) is an agency for arbitrating on unresolved complaints between regulated firms and their clients. Full details of the FOS can be found on its website at www.financial-ombudsman.org.uk



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