How to stay sane when the Bank Of England interest rate rises during your house purchase
How does this all impact you? Will it all fall apart? Can you still buy the property that you've set your heart on?
The turmoil and upheaval in the world can create all kinds of feelings of unrest and be quite unsettling. Each week brings a new issue in the press with complicated reports about interest rates, property values, and inflation.
And as the press report changes to the Bank of England base rate and increasing inflation, you would be forgiven for feeling a little uneasy if you are in the middle of buying a new property. How does this all impact you? Will it all fall apart? Can you still buy the property that you've set your heart on?
The truth is that there is never a blanket response to these questions. It depends on your circumstances and the stage you are at in the property purchasing process.
If the Bank of England base rate increases, mortgage lenders will follow suit and increase the rates on the mortgage products. To do this, they will usually remove the mortgage deals they offer and replace them with new products with a rate that follows the new base rate.
Lender's products will change for customers that are not yet committed to a loan. If you've had a fact-find meeting with a mortgage broker, there is a strong chance that the figures that you have been quoted are no longer relevant. This will mean that you will need to speak to your broker again to get updated figures.
How do you know if the lender has changed the products? You can find this out by speaking to the mortgage advisor about what mortgage products are available now. If the mortgage deal you were looking at has been withdrawn, there will always be something to replace it. The terms will be different, most likely, the monthly cost may have increased slightly, but mortgages will be available. All is not lost; if you lose the mortgage deal you thought you would apply for, there will be other options.
Perhaps it will cost you slightly more each month, or it may alter the deposit you have to put down. In extreme cases, you may not be able to borrow quite as much as you were going to borrow before.
And suppose that you are very close to completing your sale. There is a high probability that you will have already received your full mortgage offer. It is rare for a mortgage lender to revoke a mortgage deal after offering the full mortgage, so you probably have nothing to worry about. All the same, it is best to double-check if you are worried at all by contacting your mortgage broker.
Speak to your advisor and your estate agent to see if you are affected by these changes.