Beat Interest Rate Increases in 2022

2022 was going to be the year, wasn’t it? No more covid restrictions, back to normal life, holidays, children back in school. Were any of us expecting what started to unfold with the economy? A huge increase in the cost of what feels like everything. Fuel, food, property, interest rates, the list goes on.

We have seen big rises in the bank of England base rate this year so far which is pushing mortgage rates higher and higher. We get emails from different lenders almost daily letting us know their rates are going up, sometimes with only a few hours’ notice. As well as some late nights working for the team here, it also means that monthly payments could change for people shopping around. By the time you have decided on a lender, the rate has gone up.

We can’t offer much help with your gas and electricity bills or your food shop, but we do have a way that you can minimise the effect of these rate increases on your mortgage payments.

If you are due to finish your current rate within the next 6 to 8 months, then you need to read on. We see so many people taking the easy option, they wait until their current lender writes to them and they simply choose a new rate with them. Afterall, it’s just a few boxes to tick and it’s job done. BUT…

There are a couple of very good reasons not to do that. The first is that this is very rarely going to give you the best deal. (Loyalty certainly isn’t rewarded by banks these days.) There are a few exceptions to this of course, but generally speaking, you will be better off swapping to a new lender.

The second is all about timing. If you stay with the same lender, then you can usually only choose a new rate 3 months in advance. But with rates changing so rapidly, we don’t know what could happen within the space of 3 months.

Swapping to a new lender at least 6 months before your current mortgage ends means that you can secure a new rate and then let it sit and wait until it is needed. The mortgage you opt for is protected from any more rate increases within those 6 months.

Swapping lenders comes with some other benefits too, if you want to make any changes to your mortgage this is easy to do at the same time (subject to acceptance criteria of course). Maybe you are considering some home improvements, a new kitchen or bathroom or maybe even an extension? This is the ideal time to release some extra money to fund those works.

Many clients have been asking if they can swap even earlier as they are worried about rates going up more and more. The answer is yes. You can swap rates and lenders at any time, but if you do decide to swap you will most likely have a penalty to pay. This may well outweigh any savings to be made in the next couple of years. So, the benefits need to be weighed up in terms of future protection against the cost of doing so – often a tough decision!

Sometimes though, even if we want to swap lenders it might not be possible. If your situation has changed or your income has decreased you may not be able to move to a new lender. Don’t panic though! You will always be able to choose a new rate with your current lender. Ok, it may not be the best on the market but it will always be better than leaving it to go on to the lender’s standard variable rate. That really is my biggest piece of advice right now – never let your mortgage go on to the lender’s variable rate!

We are on a bit of a mission this year to bring some advice to anyone who needs it. This is why here at Vantage, we have set up a mortgage YouTube channel so that everyone can access some free advice. It is packed with content covering many of the questions we get asked, just search “Adam Messer Mortgages” and enjoy!

If you would like to look at your own situation you can get in touch with us any time on 01295 981300 or simply email hello@vantage-mortgages.co.uk.

YOUR HOME MAY BE REPOSSESSED IF YOU DO NOT KEEP UP REPAYMENTS ON YOUR MORTGAGE OR ANY OTHER DEBTS SECURED ON IT. Our typical fee for our service is £500.