Your home may be repossessed if you do not keep up repayments on your mortgage
The interest rate of your mortgage most likely will change over its lifetime. A small increase or decrease could make a big difference to the total amount you'll repay and your monthly payment. The base interest rate in the UK is set by the Bank of England, who can raise it or lower it depending on the economic climate at the time. If this rate changes, the rate of interest you pay on your mortgage may change too, depending on the type of mortgage you have.
There are many types of mortgage and they’re affected by a change in interest rates in different ways.
Fixed rate mortgages keep your monthly payment the same for a period of time. This is an advantage if rates rise but if rates were to fall you'd still pay the higher rate until the end of your fixed term.
Standard variable rate mortgages are based on the standard variable rate of the mortgage provider although they may offer a discounted period. The rate you pay will still fluctuate based on your provider's standard variable rate.
Tracker mortgages are variable rate mortgages which typically track the Bank of England base rate by an agreed amount above or below the base rate for a set period of time. If the base rate rises or falls, the interest rate will rise or fall by exactly the same percentage.
The Money Advice Service  is a government website which provides free and impartial advice on financial matters. They estimate that three out of four people would struggle to make repayments if their payment was to go up by £200 a month. Their money calculator  lets you calculate what difference a rise in the interest rate would make to your mortgage. On a £150,000 mortgage, taken over 25 years, a 1% increase in interest rates would put payments up by £85 per month.
The repayment figures (as of 18.05.18) for the various rates are detailed below.
|Your mortgage interest rate %||Monthly payment (Repayment mortgage)|
(These figures are based on a standard mortgage and the basic mortgage costs, with no additional items added to the mortgage.)
Before you take out a mortgage on your new home take care to plan ahead. Make sure that you could still afford the repayments if the rate was to rise. It pays to make sure you have the best deal available and to plan ahead and look for your next step when any deal you have is due to expire. Over the life of any mortgage interest rates are likely to change. If you stay informed and plan ahead, you'll be ready for it when it happens.
Yorkshire Bank's mortgage support will make the mortgage process an easier journey for you.
Help on the journey to owning your own home.
Is a buy-to-let property the right investment for you? Find out with our examination of the many aspects involved.
Complete our online enquiry form and one of our advisors will be in touch to discuss your mortgage requirements and available options.
Got a question? Our advisors are available through live chat to help you find the answers.
Get in touch to discover how our advisors can help you.