You may be able to afford the repayments now, but think about what could happen if your (or your partner’s) income fell or if interest rates increased. We list a few issues that could arise, so you know how you could make plans for them:
Fall in income…
You could lose your job or take a lower paid job role
You may need to stop or slow down work to look after dependents
You may get made redundant
You may start a family and take paternity/maternity pay
Mortgage Repayment rises…
Maybe you are at the end of your discounted mortgage rate
Interest Rate rises, it maybe at a low at the moment but will it last?
Change from standard mortgage to buy-to-let
What happens if the interest rate rises?
Mortgage rates are usually set by the mortgage lenders, but based closely to the Bank of England base rate. Whilst we have some of the lowest rates available, this may not last in which case as the interest rate goes up, your mortgage repayments will do to.
Mortgage rate rises will effect you, unless you have a fixed rate mortgage. Even then, it maybe better to fix the rate for the longest possible period that you feel comfortable with or thats been recommended by your mortgage broker.
Mortgage Offers Coming to an end?
Discounted rates, fixed rates and special rates are only available for a set period, usually between 2 and 5 years. When this period ends, it could result in much higher rates so its best to get in touch with your mortgage broker to re-do your mortgage deal.
What about future changes…
First off, its best not to take out the biggest mortgage you get offered, personal circumstances can change so be wary of this is you are on the brink of being dry.
Try and build up an emergency fund, saving £25-50 per month into a savings account that you can’t touch, really can make a difference. There are recommendations out there, that you should have the equivalent of a years salary in the bank, however we all know that it isn’t always possible. But a few hundred pounds can make a difference.
There are quite a few insurance products available in the market place that can help protect you agains accident, sickness, unemployment, etc. Our specialist mortgage brokers can help you by providing a no obligation quotation. Click on insurance for more information.