Over recent weeks, several lenders have announced that they are raising their standard variable rate (SVR). Despite interest rates remaining at a record low of 0.5% for over three years, millions of borrowers are set to be affected by rising SVRs and increased mortgage repayments. So, if you're with the Halifax, RBS, Co-Op or one of the other lenders who are raising their SVR, what can you do?
If your standard variable rate is set to rise, one option is to consider remortgaging to another lender. With continued competition in the mortgage market, there are plenty of great deals out there. For example, Barclays have recently launched a range of fixed-rate deals deliberately aimed at people whose SVRs are rising.
Andy Gray, head of mortgages at Barclays, explains: "These new deals are about helping thousands of borrowers to act to reduce their largest monthly financial commitment, their mortgage. As customers with other lenders see an increase in their SVR this is about helping them make essential savings."
If you're thinking of remortgaging, it can often pay to ask a mortgage broker to look into your options. They can scour the market for all the deals that are available and they will also take into account any charges or fees for switching. A broker can work out what your best options are, taking both the interest rates and charges into account.
Many lenders offer mortgage deals as ‘loyalty' products to their existing customers. If you are with a lender whose SVR is set to rise, it may be worth giving them a call to establish whether they have any other deals you can take advantage of.
Keith Osborne of whathouse.co.uk says: "You will often find that your existing lender has a range of deals designed specifically for existing borrowers. Their retention deals are designed to stop borrowers remortgaging to other lenders. It's certainly worth investigating whether your current lender has any deals available. But don't automatically take their best rate - always compare it with the other options available in the market before signing up."
Over recent years, many people have maintained their mortgage at the same level because their interest payments have been so low. Now, if your mortgage rate is set to rise, perhaps it's time to think about repaying some of your loan. If you have savings or investments, it could be advisable for you to pay a lump sum off your mortgage. Again, a mortgage broker should be able to provide you with some specific advice.