To be worried about interest rates rising and the effect on a large mortgage payment each month...

[NovaMN]

Worrying financially. So many of our household bills have gone up and now interest rates again which will increase the mortgage.

Stupidly we've not long moved.

Can I rest and not worry about having to sell?

Is your mortgage not a fixed rate?

It depends on your overall incomings and outgoings as to how much slack there is as to how you'll cope.

But you should have been stress tested to above the current rates and minimal rises. They're still tiny compared to historically.

Best thing you can do is to have a good overall review of your budget to cut the bills and spending where you can to free up some money to save so you have a cushion in the future.

But you should have been stress tested to above the current rates and minimal rises. They're still tiny compared to historically.

Oh I know,,,that's probably the sleepless nights, I can remember 15% interest rates. We moved from a one bed to a 4 bed, with a new mortgage and as it was a new rate the mortgage payment actually dropped.

Impossible question to answer, only you know your circumstances.

Are you on a fixed mortgage rate? Is so your payments won’t change. If on a variable rate it will increase your payments by about £500 a year on a £200k mortgage. Do you have enough slack in your finances to pay that?

As you’ve only recently got a mortgage, they would have assessed your finances with the assumption that interest rates would rise.

@NovaMN

But you should have been stress tested to above the current rates and minimal rises. They're still tiny compared to historically.

Oh I know,,,that's probably the sleepless nights, I can remember 15% interest rates. We moved from a one bed to a 4 bed, with a new mortgage and as it was a new rate the mortgage payment actually dropped.

How is it possible you've moved from a 1 bed to a 4 bed but the mortgage is less per month?? That makes no sense unless you moved with the same size or smaller mortgage than before. Or you were somehow paying a really high 5%+ interest rate and you're now on 1%?

If you're not on a fixed rate mortgage at the moment then presumably you're free to move to one? There are plenty of ten year fixed mortgages hovering around the 2.5% mark, which should be affordable based on the affordability test you would have completed. Unless your circumstances have changed since of course.

How is it possible you've moved from a 1 bed to a 4 bed but the mortgage is less per month?? That makes no sense unless you moved with the same size or smaller mortgage than before. Or you were somehow paying a really high 5%+ interest rate and you're now on 1%?

Could have moved to a cheaper area?

Sounds like you were on standard variable rate which is around the 4% mark or was. Fixed rates tend to be much cheaper.

I always fix for this reason.

How is it possible you've moved from a 1 bed to a 4 bed but the mortgage is less per month?? That makes no sense unless you moved with the same size or smaller mortgage than before. Or you were somehow paying a really high 5%+ interest rate and you're now on 1%?

We bought first house and fixed for long term - rates dramatically dropped. When we moved we borrowed more and pay less a month just due to rates being less - we did fix again but not for as long.

If you've not long moved is there much scope to change to a fixed rate in immediate future?

@Calennig

How is it possible you've moved from a 1 bed to a 4 bed but the mortgage is less per month?? That makes no sense unless you moved with the same size or smaller mortgage than before. Or you were somehow paying a really high 5%+ interest rate and you're now on 1%?

We bought first house and fixed for long term - rates dramatically dropped. When we moved we borrowed more and pay less a month just due to rates being less - we did fix again but not for as long.

If you've not long moved is there much scope to change to a fixed rate in immediate future?

But rates haven't dropped dramatically for a long time, unless she was on a 15 year fixed rate at 6% or something?!

@Nicholethejewellery

How is it possible you've moved from a 1 bed to a 4 bed but the mortgage is less per month?? That makes no sense unless you moved with the same size or smaller mortgage than before. Or you were somehow paying a really high 5%+ interest rate and you're now on 1%?

Could have moved to a cheaper area?

I guess so? But unless it was a 1 bed in london and a 4 bed in Middlesborough I can't see it making that much difference. I'm so invested and intrigued 😁

@NovaMN

But you should have been stress tested to above the current rates and minimal rises. They're still tiny compared to historically.

Oh I know,,,that's probably the sleepless nights, I can remember 15% interest rates. We moved from a one bed to a 4 bed, with a new mortgage and as it was a new rate the mortgage payment actually dropped.

This was my comment, related to the word 'historically'.

At the time, yes, we moved from a one bed with a mortgage interest rate of 15%, to a new mortgage on a four bed house, costing more than the one bed house. The mortgage payments were less because the interest rate was so much lower.

But that wasn't the question, I'm not asking about that 'historic' mortgage, I'm worried now.

They could have benefited from paying off some of the mortgage and increase in prices, along with the 4 bed being in a cheaper area (the rises seen in London/SE in the last few years haven't been replicated across the country, in extreme circumstances, prices are still below 2008 crash levels).

Say they bought a 1 bed for £100k and paid off £50k and the price went up to £200k, they'd have a £150k deposit and say their 4 bed is in an area where a 4 bed costs £250k, they'd continue to have a £100k mortgage, which would be cheaper because the interest rate is lower.

But rates haven't dropped dramatically for a long time, unless she was on a 15 year fixed rate at 6% or something?!

We were about 2007/8 when we bought fixed 10 years and we worried about rates rising and struggling to manage. Ended up moving sooner due to work school reasons and getting a much better deal and having been burnt - fixing for 5 then again this year for 5 years.

She could also have suddenly inherited a huge deposit, moved somewhere much cheaper or been on a higher rate due to personal financial situation that's improved - it's not that impossible.

I'd look at the penalties in current mortgage - and talk to current company and see if it's possible to fix even for a shorter time period. Long term over paying helps with repayment mortgages - but that will take years to show and at time of rising prices be harder to do.

Otherwise it's monthly Budgeting where can you cut back - if you really can't manage see about changing to interest only but your not going to be re-paying the loan with that.

I don't think they know where interest rates are going to end up - they do look to be rising due to inflation long term - so maybe worth playing with on-line cacluators and seeing what effect the predicted increase will have on monthly payments and at what point you will hot serious problems. Though honestly I think it will be small increases for a while - and the 15% interets rates were particuar set of economic cicumstances so are unlikely.

We are fixed until next June, but have a fairly hefty mortgage.
I’m throwing every spare penny at it, as god knows what the interest rates will be when we come to remortgage. Sadly with everything else going up in price that won’t be a lot.

You’ve not answered the question as to whether you’re on a fixed rate mortgage.

If so your rate won’t increase until the end of your fixed term period.

On your offer / illustration there will be a bit about increasing rates and what the payments will be based on the svr of the lender at the time and also if the rates then go above that.

You really need to look at your paperwork.

Presumably if you've just moved then you're on a fixed rate so no need to worry about it until that runs out.

Your posts are a bit confusing OP, what kind of deal is your mortgage on?

Can’t you just answer the question about if you’re on a variable rate mortgage? If you are, what made you take one and if you’re not, you can stop worrying.

In your mortgage appointment they will have gone through a section that gives the impacts on rising interest rates. This will be in your mortgage illustration - at least you can have a look at actual figures.
If you’re really concerned I would fix on a deal now.

We have one part of our mortgage fixed, but have kept the part we ported across from our previous house on a variable rate, because its terms (bank base rate + a tiny percentage) was still a cheaper rate than the cheapest fix we could get at the time we last took out a new fixed rate on the new borrowing. So that is going up with the rise in interest rates.

On a variable rate you have the option of moving to a fixed product at any time, and after a certain amount of time you can do that without a penalty.

Just as an illustration, our current payment of about £500 a month has gone up by £6 for every 0.25% rise in rates.

You should be notified by your mortgage company of your new payment following each rise, so you can work out for yourself what the impact on you will be. They should have notified you of the change following the two rate rises over the last two months, so check for letters or emails with that information.

@NovaMN

But that wasn't the question, I'm not asking about that 'historic' mortgage, I'm worried now.

Are you on a fixed rate? If not, can you fix now before rates rise again?

now interest rates again which will increase the mortgage.

If OP was already on a fixed rate at her current property then interest rises wouldn't be an issue till end of the that fixed term.

So I don't think she can be but then as PP said interest rises and rises in new payments should have been communicated to the OP.

Perhaps she worried longer term about intertes rate rises - and I don't think anyone sure where they are going but up - as so much depends on global events and how inflation evolves.

(I've family members who out right own houses and rely on investments, savings and pensions and they may well welcome higher rates of interest)

We've been over paying our mortgage for years which should help us weather any rises when we next fix in about 4 years - plus we've are starting to make a dent on the loan amount not just paying interest as you do in early years of mortgage. That a very different position to OP though.

OP you're making absolutely no sense at all.