After several years of steady interest rates, the European Central Bank raised its interest rate in July. But what does this mean for mortgage holders, and is there a way you can reduce the impact these changes will have on your monthly repayment?
The increase in the ECB rate in July was the first such rise since 2014. Raising interest rates is an effective tool to combat rising inflation, which currently stands a 7.4% in the eurozone, the highest it’s been for over 20 years.
How will the ECB rate increase affect my household?
Rising interest rates mean that credit or money costs more. For most households this typically leads to an increase in mortgage repayments. Financial institutions pass on the interest rate rise, increasing their mortgage rates.
Tracker mortgage rates will increase automatically as they mimic or track the ECB rate. Variable rate mortgage holders are at the mercy of the banks who can decide at any stage if they will pass on the rate increase. While fixed rate mortgage holders won’t see an immediate change to their repayments, they will face higher rollover rates once their fixed-rate period comes to an end.
The general cost of living is rising rapidly & this interest rate increase is just one more financial challenge, but it can be overwhelming. For most households, their mortgage repayment is their most significant financial commitment. The good news is there is a way to limit the effect of rising interest rates – switching mortgage provider.
What are the benefits of switching mortgage provider?
Unless you have been proactive with your mortgage, you will probably be on a variable rate, which, based on the market at the moment, is likely to be considerably higher than other products available to you. By switching to a new provider you could make a dramatic difference to your mortgage repayments.
- You can access lower rates
As you pay your mortgage each month your loan amount naturally goes down. On the flip side, the value of your property could have increased considerably over the year. This means that your Loan to Value (how much you owe on the mortgage vs the value of your property) may have gone down, which could translate to lower rates.
- You can lower your monthly repayments
The lower your rate, the less you are paying the bank in interest. At the same time you are still clearing the same amount of capital from your loan.
- You have the potential to reduce your mortgage term
If you are successful in reducing your interest rate, you may consider reducing your mortgage term too. This means you could potentially clear you mortgage earlier.
- You can get cashback for switching
In many cases, banks will pay you to bring your mortgage to them, which often comes in the form of a cash lump sum.
How can Cornmarket help you switch mortgage provider?
Our goal is to help you access the best value for your mortgage & have gathered an expert team dedicated to helping mortgage holders nationwide.
We offer expert, impartial advice
We work with a range of financial institutions, and have built up considerable knowledge of their mortgage products and offers. Our team can use this knowledge to offer you expert, impartial advice when you are choosing a new provider.
We do the hard work
We will come meet you at a time and place that suits you, whether that’s your home or workplace or virtually. We will only need to meet you once, and you will only need to fill out one application with us. We then apply to the banks on your behalf, looking for the best deal for you.
We can find the best rates and cashback offers for you
Our goal is to find the best rates specific to your mortgage, while at the same time seeking out the best cashback offer.
We offer a full mortgage review
We will conduct a full review of your mortgage to explore reducing your term and consolidating any loans you may have. We will also conduct a complimentary review of your mortgage protection and home insurance to make sure you are not overpaying on these products.
If you would like to find out more about how Cornmarket can help you to switch your mortgage provider, call us on (01) 420 6765.