Some people will be feeling pretty pleased with their low mortgage repayments at the moment. Those that are on mortgages that track the base rate will have seen their repayments fall steadily as the interest rates continue to go down.
Some others, though, could be in for a nasty shock, and quite soon. More…If your mortgage deal happens to be one of those that tracks below the bank’s base rate then you risk a massive jump in your mortgage repayments when your deal expires.
For example if you have £200,000 mortgage, then the repayments could jump from less than £100 to over £600. With Bank rates falling to a record low of 1% last week some people are paying 0% interest and some others as low as 0.19% soon to be zero if the predicted further fall in interest rates occurs. It is said that most of these loans were sold in Summer 2007 so the nasty shock is just around the corner for some people.
Richard Morea of broker L&C Mortgages said: “The shock is inescapable — those on super-low rates need to be ready. Even the cheapest remortgage deals are at 3%.” This is potentially quite grim news for some people and it is as well to do as the man says and check the fine print on your mortgage in order to prepare for any rate hike that may be in store. In particular check to see what standard variable rate you will fall on to, and see if there are better deals out there.
