Should I move to a new fixed rate deal early?

The Bank of England raised interest rates to 2.25% yesterday. With the new interest rate announcement (and the fear that as the months go on interest rates could go much higher), some homeowners are asking the question of whether it would be better to move their current fixed mortgage to a new deal before things potentially get worse.

If you are in a fixed rate deal at the moment with less than a year remaining you might be worried about the news that rates could skyrocket to 4.75% next year. This and higher percentage rates have been banded about as the UK is dipping its toes into the start of a possible long-term recession.

It’s time to review your paperwork

The most important thing you can do right now is to dedicate some time to work out whether you will be better off moving to a new fixed deal early, despite the fact you might incur early repayment charges. Typically, the closer you get to the end of your current fixed deal, the lower the early repayment charges are. So for some homeowners coming to the end of their fixed rate in 2023, sitting down and working through all of the figures could be a shrewd move right now.

You’ll want to weigh up all of the costs involved and calculate your total monthly payments over the new fixed period. The best way to do this really is to speak to a mortgage advisor and they can do most of this work for you. In this instance even with money tight, it might be wise to seek the professional help of a financial advisor. Financial advisors can look at more than your current mortgage and go into a full, detailed assessment of your finances.

Saving money wherever you can is going to be the only way to protect yourself going into 2023. So it’s worth spending the time getting yourself prepared right now as things are only going to get more difficult in the coming months.

High demand for Fixed Rates

It’s also important to remember that whilst the Bank of England base rate change does not directly impact current fixed rate deals on the market, the current fixed mortgage deals will become more popular as other homeowners make their own financial assessments and therefore demand could outstrip the supply, meaning that the current fixed rate deals that you see on the market may not be around for long.