We’ve put together some information on how you can protect yourself against rises in mortgage rates. The first thing to check is what type of mortgage you’re on (if you don’t know this already). The effect of an interest rate rise depends on the type of mortgage you have.

Below, we’ve broken down the different types of mortgages to help you identify what’s right for you.

Tracker mortgages

If you’re on this type of mortgage, you may have found your payments increased with various hikes to the Bank of England’s base rate between 2021 and 2023.

Tips if you’re on a tracker mortgage

  • Check what rising interest rates could mean for your monthly payments
  • Check whether there’s an exit fee if you decided to switch over to a fixed rate mortgage instead, as this could provide you with more stability
  • Seek advice from a lender to help you find the best deal going forward

Fixed rate mortgages

Most people on a mortgage in the UK are on this type of mortgage. As it’s a fixed rate deal, their mortgage rate won’t be affected by rises in interest rates and the monthly payments will stay the same. If you’re on this type of mortgage, you’ll see a change in your monthly rate when your current fixed rate ends instead. When it comes to finding your next deal, be aware that the rises in rates over the last year means your next fixed rate could be more expensive than what you’re currently paying.

Tips if you’re on a fixed rate mortgage

  • If you know your fixed rate is coming to an end in the near future, plan ahead (even up to six months before it ends if you can).
  • Pop a reminder in your diary to look into this as most lenders will offer new fixed rate products which can be secured months in advance of your existing rate ending – which offers security should another rise come into play.
  • Also bear in mind, though, if rates were to drop, you might lose your reservation fee to switch rates again – check out what’s on the market and available to you well in advance, and reach out to lenders for guidance too.

Standard Variable-Rate (SVR) mortgages

If you’re on a Standard Variable-rate mortgage, things are a little more complicated. People sometimes find themselves moved to this type of mortgage if their existing rate has ended and they haven’t chosen a new deal in time. With this type of mortgage, the interest rates tend to be higher than with other types, like the fixed rate or tracker mortgages. The rates you pay each month can change at the discretion of the lender so if you choose to stay on this type of rate, it can be difficult to know what’s coming up each month and plan ahead.

Tips if you’re on a Standard Variable-Rate mortgage

  • Do some research to see if you can switch to another type of product, which would make budgeting each month easier
  • If you want to stay on this type of mortgage, have a look for a more competitive deal
  • Consider the possibility of any fees you’ll need to take into account when comparing deals on the market
  • Speak to your lender if you need some further guidance

Be mindful of fees

It’s important to check whether you’d incur any fees – such as an early repayment charge (ERC) – by switching when you’re mid-way through your current deal. A lender will be able to talk you through your options and help you identify the best way forward.

If you’re still worried or are struggling to keep up with payments

Get in touch with your lender as soon as possible as they will assess your circumstances to see what options they can offer you. We’re always here to help if you’re worried about missing payments or are struggling with debt.