Interest rates - planning ahead


Budgeting for potential changes to your mortgage payment is an essential part of your financial planning. It's important that you consider how you would cope if interest rates or your mortgage payment increased.

How a change may affect you

The Monetary Policy Committee (MPC) of the Bank of England meets to set the base interest rate eight times per year. There’s no need to call us if the base rate is changed, affected customers will be informed in due course.

The effect a change in the Bank of England Base Rate will have on you depends on what type of mortgage you have:

If you have a tracker mortgage:

A tracker mortgage tracks the Bank of England Base Rate and therefore a change in Base Rate would directly affect you and your mortgage payment.

If you have a fixed rate mortgage:

If you have a fixed rate mortgage, the fixed rate will be guaranteed until the end of the promotional period, but the payments due after this point could increase or decrease.

If you have a Standard Variable Rate (SVR) mortgage:

A Standard Variable Rate (SVR) is a variable rate of interest set by the lender. Many mortgages change to this rate when the promotional period ends on a mortgage product.

If you have a discount rate mortgage:

A discount rate mortgage will give you a discount off either our Standard Variable Rate or a product linked to the Bank of England Base Rate. If either of these interest rates change, then your mortgage interest rate would change too.

Your latest mortgage statement will tell you what type of mortgage you have and if applicable when any promotional period will end.

 

YOUR PROPERTY MAY BE REPOSSESSED IF YOU DO NOT KEEP UP REPAYMENTS ON YOUR MORTGAGE
What you could do now

We recommend that you regularly review your mortgage payments to ensure that you could cover any potential increases in the Bank of England Base Rate.

Using our mortgage calculator may help you understand by how much your monthly payments could potentially increase. A monthly budget planner is also a useful way of keeping track of your finances.

The example below illustrates the affect of a 0.5% rise in the current Bank of England Base Rate on a Base Rate Tracker mortgage. This is based on an Interest Only mortgage and is for illustrative purposes only.

Current Bank of England Base Rate 0.75% Bank of England Base Rate increases to 1.25%
Mortgage: £100,000 Interest only Mortgage: £100,000 Interest only
Product Type: Base Rate Tracker Product type: Base Rate Tracker
Current pay rate: 4.74% New pay rate: 5.24%
Current monthly payment: £395 New monthly payment: £436.67

 

YOUR PROPERTY MAY BE REPOSSESSED IF YOU DO NOT KEEP UP REPAYMENTS ON YOUR MORTGAGE
Budget planner

Use our budget planner to help you list and add up all your household income and expenses. This will enable you to:

  • Work out how much money is coming into your household
  • Work out how much money is going out
  • Work out affordable amounts to repay any debts you may have

If you are having problems paying your mortgage, the worst thing you can do is ignore it. The sooner you get in touch, the easier it’ll be for us to try and find a solution together.

If you would like to discuss any aspect of your mortgage further, please do not hesitate to contact us, we’re here to help. You can call us on 0345 300 8000*.

 

YOUR PROPERTY MAY BE REPOSSESSED IF YOU DO NOT KEEP UP REPAYMENTS ON YOUR MORTGAGE

Get in touch

Where can you get help?

Contact us, we’re here to help you:

If you have any questions about how an increase in the Bank of England Base Rate could affect your mortgage or would like to discuss any aspect of your mortgage, please call us on 0345 300 8000*.

If you’re struggling to keep up with your mortgage payments, please see our Money worries section for more details on how we can help.

YOUR PROPERTY MAY BE REPOSSESSED IF YOU DO NOT KEEP UP REPAYMENTS ON YOUR MORTGAGE