An interest rate rise is looming over households in the United Kingdom. The Bank of England announced that rates are expected to increase by 0.25 percent which has gotten homeowners scrambling to remortgage. This rise is significantly important as it marks the end of a decade of falling mortgages. According to some investors, 8 million Brits haven’t even seen an interest rate rise in their life and don’t know what to do. So, here are some tips on how you can prepare for the impending crisis.
Act Now
It is important that you make your decision as soon as possible, as it’ll be downhill if you wait too long. Conduct your research and determine what you rate you can get now, and act before it’s too late. Many people move too slow and therefore can’t take advantage of the lead time given to them before the interest rates increase.
Refinance
It might be wise to lock in your mortgage at current rates before they rise. If you’re eligible to refinance your home, this may be the time to do so. One way is to refinance to a shorter-term fixed rate loan which can save you money by lowering your interest rate. A shorter term will also mean you will save more money over the life of the loan since you will pay less interest. If you’re over the age of 62, you may also want to look into a reverse mortgage loan. This will allow you to eliminate monthly mortgage payments and access your home equity. Whatever you decided to do, be sure that you get your applications in as soon as possible so that you can catch the lowest rates and prepare early.
Make Sure Your Credit Score Is in Tip-Top Shape
If your credit score isn’t in good condition, it may be hard for you to act on any decision when rates start to rise. The three numbers that make up your credit score play a huge role in the rate you can get on a mortgage so be sure that you do what you can now to prepare yourself. Some ways that you can improve your credit is to check your credit report for errors, pay your bills on time, and pay off credit cards so that you’re a safe distance from your credit limit.
If you act now, you can do a lot prior to the impending rise in interest rates. It’s always best to be proactive than reactive.
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