Your tolerance to interest rate movement

Changes to interest rates can have a significant impact on the cost of your mortgage. Lets say you currently have a fixed rate mortgage at a rate of 3% secured three years ago. This is now coming to an end and the current variable rate is 7.5%.

Switching to a new fixed rate mortgage (if indeed this is the best thing to do) will secure you a new rate of, lets say, 6% for a further three years.

At best your mortgage payment will increase by 100% if you move to a new fixed rate and slightly more than this if you switch, even temporarily, to the variable rate.

For many, this situation puts them into payment shock and there could be severe implications for those who cannot afford this increased payment. It is essential therefore to test how far interest rates would need to move before the payments became unaffordable. This test should be done prior to committing to a new mortgage.

For these reasons we highly recommend that you take advice from a MoveMachine Money Adviser who will help you understand the implications of interest rate movements on your personal circumstances. Call now on 0845 117 0777 or email us.