At the moment it may seem like everything is increasing. From the cost of living to interest rates, everything is on the up.
Businesses may be impacted by these things as well, with some reaching out to outside lenders for a ppp loan alternative to help see them through. Interest rates are set by the Bank Of England and can have an effect on lots of different areas of your life.
So, if you’re unsure of what to do when the interest rates start to rise and have a potential impact on your daily life, keep reading…
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Invest More Savings
One of the benefits of higher interest rates is more interest on your savings. So, if you’re thinking about saving, now would be the best time to do it while the rates are high.
You can also shop around different banks to see who has the highest interest rate as well, allowing you to save as much money as you can and accrue decent interest.
If you already have a fair amount of money saved, you should still be putting money into it to take full advantage of the high-interest rates as well.
Although there may not seem like any silver linings to increasing interest, for savers, it can actually be a blessing in disguise.
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Figure Out If Your Mortgage Will Change
The impact that interest rates will have on your mortgage will depend on the type of one that you have. Once you know for sure what type of mortgage you have, you’ll be able to work out if the interest rates will affect you.
You can find plenty of online calculators too if you’re not 100% certain about the maths. If you know how much your repayments will increase, you can then plan ahead and start budgeting before they hit.
Don’t leave it until the last minute as you’ll soon find yourself struggling to make your adjusted payments.
Overpay Your Repayments
Some mortgage providers will allow you to make overpayments, so if you know the interest rates are going to rise, then it could be a good idea to make some.
There can sometimes be stipulations when it comes to paying off your mortgage early, so make sure you check with your lender. However, setting yourself up in a good position before the interest rates affect you can be a smart move.
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Avoid Borrowing Finance
As interest rates are higher, this will mean borrowing finance can come at a higher cost. Loan repayments will be impacted by them as your APR will be a lot more than it would have been a year ago.
If the rates are continuing to rise, it might be a good idea to forgo taking out extra credit as you’ll end up paying back a lot more than you might have originally expected. If you already have a loan taken out and it has a fixed rate, then you won’t need to worry about the rates affecting you.
But if you don’t have a fixed rate, you may be contacted by the lender to advise of your payments increasing. One way to avoid high rates is to refinance your loan with a lower interest one with a fixed rate.
This way you’ll be able to keep your payments the same and not worry if the rates continue to rise elsewhere.
Interest rates going up can seem scary as you may be concerned about what type of impact it may have on your finances. However, with a little planning, you may find that you avoid any harsh blows to your accounts.
Don’t be afraid to shop around for the best deals either. Just because the interest rates have increased doesn’t mean you need to settle for something beyond your means.
With any luck, you’ll find that the increased interest rates actually help you get a better grip on your finances and enable you to stay on track.
