Homeowners enjoying cheap mortgage deals should not bank on low interest rates keeping their repayments down for too much longer.
Although the Bank of England voted to keep the official interest rate at the historic low of 0.5% for yet another month, lenders have recently put up home loan costs - and have warned they may have to rise again.
More than a million homeowners saw their home loans go up in May as the Halifax, Co-Op Bank, Bank of Ireland, NatWest and several other lenders hiked rates, blaming the increase on the cost of raising money on wholesale markets.
One of the key mortgage changes coming from low Bank of England rates is lenders have stopped offering loans based on the official interest rate and have started setting their own standard rates.
Standard rate is the rate charged if a mortgage is not on a special fixed, tracker or other deal.
Debt advisers claim many families are surviving financially because of low home loan rates, and that millions could fall in to money problems if rates rise just 1%.
For homeowners treading that thin line between debt and financial survival, it’s important to act now to set a budget and control spending.
Budgeting is one way homeowners can take a leaf from businesses. Firms can make bigger profits two ways - earning more money or cutting the amount they spend. Most homeowners cannot easily earn more cash, but most can spend less.
The aim is to create as big a cushion as possible between money coming in and spending.
Don’t be scared to talk to lenders about rescheduling unsecured credit - borrowing like credit cards, loans, overdrafts, catalogues and store cards.
This informal arrangement does not involve going to court. Often called a financial management plan, borrowers can go to a debt advice professional for help setting up a budget and negotiating with lenders.
For borrowers facing tougher financial problems, more formal debt solutions like an individual voluntary arrangement (IVA) or bankruptcy may be more appropriate.
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Notes to editors:
- Money Debt and Credit is one of the UK's fastest growing financial solution companies.
- The company was founded in 2006 on the belief that every client has the right to appropriate financial advice. Since then we've gone from strength to strength and have helped thousands of people with a variety of financial solutions.
- We offer a range of services including Financial Management Plans, IVA s, Loans, Mortgages, Full & Final Settlements, Bankruptcy, Investments and Pensions.
- Specialties: IVA s, Financial Management Plans, Loans, Mortgages, Trust Deeds, Full and Final Settlements, Bankruptcy
For more information or debt advice contact:
Money Debt and Credit
45 Clarendon Road, Watford, WD17 1SZ
Tel. 0800 16 999 46
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