New homeowners urged to ‘check mortgage very carefully’

Those looking for the best mortgage rate are being advised to consider what they can afford, following Thursday’s rise in interest rates.

According to Sue Edwards, senior debt policy officer at Citizens Advice, the rate rise and subsequent increase in mortgage rates “could spell disaster” for people whose finances are already stretched.

After increasing by a quarter of a point to five per cent, interest rates could expose mortgage holders to additional costs and a number of lenders have spoken of the potential consequences for borrowers.

Ray Boulger, of independent mortgage adviser John Charcol, said that homeowners paying the standard variable rate (SVR) of their lender should consider assessing their current financial situation and shop around for a better deal.

“It’s important to take all factors into consideration when looking for a mortgage,” he remarked.

Those who could be “worst affected” by the rate rise, he continued, are people “who took advantage of good fixed-rate deals two years ago and will shortly be switched to their lender’s SVR unless they take action”.

The Council of Mortgage Lenders suggested that homeowners with a mortgage of £120,000 could pay an extra £20 per month following the rise.

© Adfero Ltd

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