I have a mortgage of £85,000 with £20,000ish paid off on a 30 year term (variable rate).
My initial monthly payment was around £330 per month but have been creeping up with interest rates, it’s now going up to almost £430 a month (£50 since the last rise two months ago). I just don’t understand how they can calculate this amount of difference in repayments..
Can anyone explain?!
I’ve been advised to ride with the repayment increases as it’s not a great time to remortgage, any other advice would be appreciated 🙏
In: 1
Interest rates set by central banks are rising (reason, which doesn’t change that it’s happening: in much of the world to fight inflation, and in the UK also to try to protect the currency after it started rapidly losing value due to government policy)
When central banks raise rates, this makes it more expensive to borrow money.
Because you’re on a variable rate, it varies with the rate set by the central bank. Because they made borrowing all money more expensive, the money you borrowed got more expensive.
If you had a fixed rate, you wouldn’t suffer from it getting more expensive when they raise rates, but you also wouldn’t benefit from it getting cheaper when they lower rates.
How much more expensive it gets depends on the amount borrowed, time left, and rate changes, and can be calculated using lots of online mortgage calculators.
Latest Answers