In his latest Coffee Break Briefing webinar, Frettens’ own Insolvency Guru Malcolm Niekirk looked at dealing with solvent liquidations with no tax clearance.
This is the summary of that briefing.
The Bank of England recently cut the base rate for the first time in more than seven years, reducing it from 0.5% to a new low of 0.25%. The base rate is the Bank of England's official borrowing rate, which influences what borrowers pay.
For those who have a mortgage, the base rate cut means some will see their mortgages get cheaper, but it depends on what kind of deal you have. Outlined below are the various mortgages and what the cut means for each of them:
Fixed rate mortgages - These currently account for around half of all mortgages. Here you are locked into paying a particular interest rate for a particular length of time, so regardless of the base rate cut, what you pay each month will not change until the fixed period ends.
If you are coming towards the end of your introductory fixed period, be ready to pounce for a new deal as your rate will likely soar. You can usually do this three months ahead, but you will need to check with your lender.
Standard variable rate (SVR) and 'discount' mortgages - These move at a lenders’ discretion. Whilst they often rise or fall with the base rate, there is no guarantee they will now be cut.
You will usually find yourself on an SVR mortgage if your fix or tracker mortgage ended and you did not switch to a different deal. A discount mortgage follows the SVR but at a set discounted rate. For example, if the SVR is 4% and the rate is SVR minus 1 percentage point, the rate is 3%. With these rates you can often exit penalty free.
Tracker mortgages (that track the Bank of England base rate) - As the name suggests, these mortgages 'track', or follow the Bank of England base rate, rising and falling along with it. The cost of your mortgage should drop as long as lenders keep to their end of the bargain.
Two notes of caution though:
- Lenders can sometimes be slow to pass on savings.
- A very small number of tracker mortgages have a 'collar' which prevents your rate falling below a certain level. If so, your rate may not fall in line with the base rate drop. You should be contacted by your lender if you are impacted by this, but the vast majority of borrowers will not be affected.
If you are looking for a mortgage, mortgage rates are already low, so it is a good time to get a good deal if you qualify for one. The base rate going down does not change that.
If you are buying a new home a base rate cut may save you a few pounds per month if rates drop as a result.
There is a chance we will see slightly lower mortgage rates, though The Bank of England itself has said it expects any cuts will be limited. If you are looking to buy or remortgage a property, please do not hesitate to get in touch with us here at Frettens where our friendly and informative conveyancing department can answer any queries and provide you with a competitive quotation.
Our Conveyancing Team, based in Christchurch, also cover Bournemouth, Poole and the New Forest. For a free initial chat, please call 01202 499255 and Clare or a member of the team will be happy to discuss any questions that you may have.
