In UK, interest rates are on the rise while the share markets are experiencing a fall. Banks are always raising interest rates now and then and there is no sign that this will come to an end anytime soon and it makes sense for any person to devise strategies of surviving interest rate rises in the nation. With economists predicting that the monetary authorities will impose even higher rates in the years to come, there is no doubt that mortgage interest rates will continue to move upwards to even higher digits. Faced with such unfavorable prospects, every home owner must be prepared to pay bigger mortgage payments that result from rising rates. In fact, home owners holding outstanding mortgages for their homes have a lot to care about as homes are nevertheless the most valuable assets in their lives. Homes are a foundation of many people’s wealth.
Luckily, there are some effective tricks of surviving interest rate rises starting with having a portion of their mortgage fixed. Actually, interest rate changes affect standard variable rates only and it is possible for people to ensure that their future is protected from such rises by fixing their mortgage partially. One should also not rule out the possibility of interest rates declining in the future which makes it vital to take advantage of fixed interest rates as they can give you a chance to renegotiate your interest rates.
Using an offset account is also an effective way of surviving rising interest rates. This is achieved by striking an arrangement with the lender of the offset mortgage account that permits you to deposit savings and other extra funds in the account. For people with excess cash that sits on their saving accounts most of the time, this is a very useful move. The implication of an offset account is that your saving account balance is offset against your mortgage balance which enables you to escape the rising interest rates. This alternative also comes with associated tax benefits as you save money to repay your mortgage instead of your saving account earning the interest. However, since not all lenders in UK will provide you a 100% offset account, it is important that you check and agree to the stated and implied terms.
Adjusting your budget will also help you in surviving interest rate rises as it helps reduce expenses. Creating a new budget will aid in planning for your expenses even more carefully as it targets on trimming down discretionary spending such as purchasing take away food. For your discretionary spending, it is advisable that you set a maximum limit every week and do not use your credit card on discretionary spending. Lastly, matching your payments will help you survive interest rate rises especially when it comes to paying your mortgage. For instance, if you receive your payments on a weekly basis, you should also schedule your mortgage payments on a weekly basis as well. With interest rates going up and wages remaining constant, there is no doubt that interest rates have brought about huge stresses among many families.