Recently, the credit market in England had received a jolt when the Bank of England finally announced that it has decided to surge interest base rates. Though it was initially lowered from 0.5% to 0.25%, it again went up to its previous rate. The decision will directly influence your installment payments, which you need to take care of, to recompense the mortgages.
Permanent rate debts
In case you have signed a deal to make payments for mortgages that comes with a fixed rate, then this decision will not have any consequence on your interest amount as of now. The beauty of fixed mortgage rates is that it will remain constant for a specific duration, irrespective of any change in the base rate. Until the time is over, you need not worry about any increase in the interest amount. When the set time is over, the new rates will be implemented, and you will be compelled to pay more money as interest.
Standard variable debts
In this case, you will have to face the consequences of any rise or fall in the base interest rate. As soon as there is a rise in the base rate, all money lenders will make a hike in the amount they charge as a mortgage payment.
Tracker rate debts
Last but not the least; you need to know about tracker rates. These are the lenders who follow the decisions of Bank of England closely. If they bring any change in the base rate, these lenders will alter their mortgage payment rates instantaneously.
Put some thought before making the final credit deal. The more money you take from the lender, the more you will need to allocate each month for meeting the mortgage payment requirements. A sudden increase in the base rates can upset your monthly budget.