Getting you #ReadyForRateRise

If you've got a mortgage, there's a good chance you've been enjoying historically low interest rates for the past several years, with millions of Brits never experiencing a rate rise before.

That's because the underlying interest rate - the Bank of England's base rate - has been held at a record low of 0.5% since March 2009. This was done to help the economy during the downturn but, now that things are improving, base rate could go up in the near future.

But how could this affect you?

Costs could increase

Let's say you have a mortgage with a typical outstanding balance of £113,000 and an average interest rate of 4.48%, resulting in a monthly mortgage payment of £629 . If your mortgage interest rate increases to 5%, your monthly payment becomes £663, then £731 at 6% and £802 at 7%. Your own circumstances will likely differ from this, but you get the picture - costs could go up.

Sleepwalking into trouble?

Our research shows:

  • 69% worry that their mortgage rate might increase.
  • 56% of mortgage holders struggle financially with their bills.
  • 9% say they have nothing left each month after paying all their living costs and essential bills.
  • 26% would have real difficulty paying their mortgage if their monthly repayment increased by £99.

Time to act

Now is a good time for homeowners to consider their options so they can be #ReadyForRateRise. We've asked our mortgage experts for their top 10 tips:

  • Understand your current mortgage

    It's important to understand the current terms of your mortgage before you make any changes. Contact your provider to find out this information.

  • Keep a realistic track of your spending

    Knowing how much you're spending is important, as you can then measure it against your income to see what you might have leftover.

  • See where you might be able to cut back

    Spending money on lunch and coffees at work can be a real drain, so why not commit to taking in lunch every other day? TV and entertainment packages are also another expense which you may be able to cut back.

  • Think about how to increase your income

    For some people, this could be taking on a second job, working overtime or perhaps taking on a lodger (if your mortgage provider allows). Also check you're receiving all the government benefits and tax credits that you're entitled to.

  • Speak to your lender

    Explore whether re-mortgaging would suit you.

  • Shop around

    Speak to other mortgage providers - not just your existing one.

  • Look beyond just your mortgage

    Think about moving your savings or current account to see if you can make your money work harder for you.

  • Speak to an independent debt professional

    If you are struggling with debt, it's worth seeking advice from places such as Citizens Advice , National Debtline and Step Change Debt Charity .

  • Be in the know

    Find out more hints and tips on how to be ready for rate rise by searching the TSB hashtag #ReadyForRateRise on Twitter and Facebook, or reading our report , and keep an eye on the news.

  • Don't panic!

    No-one is suggesting base rate is going to increase significantly any time soon so don't panic. There is still time to plan for any future increase, and, like anything, preparing early is always the best plan of action.

i Source: Council of Mortgage Lenders - the average existing residential mortgage (stock) in Q2 2015 is £113,439. A borrower paying the average Standard Variable Rate of 4.48 per cent pays £629 per month.



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