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Following the recent increase in the Bank of England’s base rate from 0.5 percent to 0.75 percent, landlords are being urged to check their current financing arrangements. Experts are warning that…
this interest rate rise is likely to be the first of many, as consumer spending continues to snowball, and inflation creeps up.
Bank of England Base Rate Rise
Although further interest rate hikes are unlikely before next year, mortgage lenders typically lock down the best deals several months before the Bank of England pushes up the base rate. Many landlords are unknowingly stuck with poor deals. With rental yields falling, now is a good time to look at your current finance arrangements to see if you can do better with another lender or product.
If you are on a standard variable rate mortgage, your repayments will rise each time the base rate goes up. This increases your outgoings and reduces profits. And with mortgage interest tax relief being phased out, landlords with property portfolios that are heavily mortgaged will suffer more than others.
Lock in a Good Deal
Most lenders will be quick to pass on interest rate hikes, so act fast to secure a good fixed rate deal. Successful landlords don’t wait around for changes to affect them. They take action before it hurts their business. Check your mortgage T&Cs and find out whether you are still in a penalty period. If you are, do the maths and see whether it’s worth jumping ship to another lender. Sometimes, it is still worthwhile, even with a penalty factored into the calculations.
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