Category: Financial Adviser Blog

November 2017 saw the Bank of England raise interest rates for the first time in a decade, from 0.25 per cent to 0.5 per cent, causing a number of lenders to increase their mortgage rates.

The Bank of England has indicated there could be further rate rises, so if you’re on a Standard Variable Rate (SVR) or Tracker mortgage you might start to question whether now is the right time to fix your mortgage rate.

When will interest rates go up?

With the UK experiencing high inflation but weak economic growth, opinions are split on how the Bank

of England will react, making it very difficult to predict when interest rates might rise.

Should I consider moving to a fixed rate mortgage?

The attraction with a fixed rate mortgage is the certainty it gives to your monthly mortgage repayments over a set period. This is useful if you’re on a budget because it gives you peace of mind that if the interest rate goes up, your repayments will stay the same for the period of the fixed rate.

Whatever type of deal you’re on, it’s a good idea to take any increase in the base rate as an opportunity to review your current mortgage, particularly as lenders will be launching deals to entice new, and retain existing, customers. As the base rate and mortgage rate are often closely linked, many experts believe now is an ideal time to get a new deal, especially if you’re currently on a high SVR.

If you are considering changing your mortgage deal, make sure you’re clear on any fees and charges that may be due when remortgaging, as these can reduce any potential savings made. Some lenders have exit fees and early repayment charges as high as 5 per cent, so if you’re coming to the end of your term, check that you’re not switching out during the penalty period.

When looking for a new mortgage deal, it’s sensible to start reviewing your options between three and six months before your mortgage deal is due to end.

 If you’re not sure whether moving to a fixed rate is right for you, please get in touch.

Your home may be repossessed if you do not keep up repayments on your mortgage

When buying a property, you can do so either on a leasehold or freehold basis and there are important differences to be aware of before you sign on the dotted line.

With a leasehold property you own the property and its land for a fixed period, depending on the agreement

you have with the landlord. This effectively makes you a tenant and means you could be liable for things like ground rent or property maintenance bills.

Freehold means you own the property and the land it sits on.

Generally, leasehold is the ownership structure that’s in place when you buy a flat, apartment or maisonette

in England, Wales and Northern Ireland. Most houses are sold on a freehold basis.

A bad press for leasehold ownership

You may have seen some negative headlines about leaseholds in the press last year, featuring a number of homeowners who face seemingly unfair terms and unexpected costs once they’ve moved in. In recent years developers have increasingly been building and then selling houses on a leasehold basis; exposing homeowners to additional costs they wouldn’t normally need to worry about with a freehold house purchase.

What’s more, these leasehold agreements can include terms which may have been overlooked by the buyer

during the purchase, such as the doubling of ground rent every 10 years. In these cases, developers have often sold the freehold of these properties without the homeowner’s knowledge, and the new landlords have increased the charges.

If a landlord wants to sell the freehold of a block of flats, they are legally required to give the leaseholders

the opportunity to buy it. However, this law doesn’t apply to leasehold houses.

Will the law change?

With 1.4 million leasehold houses across England and the number of leasehold sales growing rapidly, the government is taking action to make the leasehold market fairer. In Dec 2017, Communities Secretary, Sajid Javid, announced new measures to cut out these unfair practices within the leasehold system, including a ban on leaseholds for almost all new build houses.

What to do if you’re concerned

If you’re purchasing a property or have purchased a new build property recently, and you’re not sure if it’s a freehold or leasehold ownership, speak to your solicitor. They will be able to find out and give you more guidance.

If you’re looking to buy your first home, or move up the property ladder, please contact us and we’ll advise you on a range of mortgage deals, including exclusive rates that might not be available on the high street.

Your home may be repossessed if you do not keep up repayments on your mortgage.