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.



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.

You can find out what type of mortgage you have and when your promotional period will end (if applicable) from your customer hub or latest Annual Mortgage Statement.

 

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

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 increase. Our income and expenditure form 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 0.1%Bank of England Base Rate increases to 0.6%
Mortgage: £100,000 Interest onlyMortgage: £100,000 Interest only
Product Type: Base Rate TrackerProduct type: Base Rate Tracker
Current pay rate: 4.59%New pay rate: 5.09%
Current monthly payment: £382.50New monthly payment: £424.17

 

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

Our income and expenditure form will help you calculate all your household income and expenses. Use it to work out:

  • How much money is coming into your household
  • How much money is going out
  • How much can you afford to repay any debts you may have

If you’re 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. Visit our Money Worries page to find out more about how we can help.

If you’d like to discuss any aspect of your mortgage further, please do not hesitate to contact us. You can call us on 0345 300 8000*. In order for us to assess your situation, we’ll ask for the income and expenditure form to be completed before you call.

 

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