It has recently been reported in the media that The Bank of England will increase interest rates in August 2018. With this increase just around the corner, are you fully prepared to deal with such a rise?
What will this mean for Home Owners?
For those on a standard variable rate or a tracker rate which amounts to between 4 and 5 million UK households, it is vital that you are immediately prepared and able to offset this rise. For it has been estimated that a 0.25% rate rise would mean that a household on a £200,000 mortgage, for example, would face paying around an extra £25 a month, or about £300 a year.
For those on a fixed rate mortgage which amounts to 4.5 million UK households, you will not immediately be faced with the repercussions of an interest rate rise. However, when you reach the end of your term, you may find you have to make higher monthly payments. Therefore, it is also vital that you are prepared and have enough of a surplus income to manage this rise.
What will this mean for Property Investors?
For buy to let landlords with an existing mortgage, unless you are locked into an existing fixed rate, a mortgage rate increase from the lender may result in more expensive monthly mortgage repayments. As a result, landlords may be forced to increase their rent which could prove unaffordable to current or potential new tenants.
A knock-on effect of this could result in an increased number of investment properties becoming or remaining vacant as they are unaffordable. Subsequently, landlords may be unable to sustain the mortgage payments on these properties leading to high levels of arrears or property repossessions. Subsequently, this could have dire consequences to some landlords who are currently holding onto their properties by their fingertips.
What should I do?
Check your mortgage paperwork to determine and understand your mortgage agreements and make financial plans now for this rate increase. This is one of the most important agreements you will commit yourself to in your entire lifetime. So please take the time to read and understand them and know the kind of mortgage product that you are committed to. We, at GDP Equity Experts, cannot emphasise this enough.
Ensure that you have undertaken a complete financial review of your finances. Take the time to work out if expenses are going to be tight over the weeks and months ahead. Knowing what cash you have to spare can help you start to put a little aside to cover you if something goes wrong or your monthly bills are to increase.
What we can do to help?
Since 2010, GDP Equity Experts have helped hundreds of families, individuals and businesses deal with debt related issues. We have been leading the way in this regulated area over the last 8 years and have particular expertise in helping people deal with crippling debt related issues.
This debt has included various debt related areas such as loan sales to Private Equity Firms, debt shortfalls following the sale of a property and general unsecured debt such as credit cards and loans.
We would like the opportunity to share this with you. As a result, our team are more than ready to engage and assist if you have been affected by this or you have any other property debt related issues.
GDP Equity Experts know what is expected and how to get you to where you want to go. We WANT to hear from you today because we WANT to help you today.
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