According to a report by Nationwide, 75% of us couldn’t tell how much our mortgage payments would change if there was a 1% change (either increase or decrease) in its interest rate.
To be perfectly honest, I couldn’t tell you off the top of my head. But why should I be able to? I’ve got a mortgage calculator that will help me work it out. On my current deal, it’d mean a difference of around £117 per month, or £1400 per year. A nice little sum to invest elsewhere (or to overpay on the mortgage).
It’s probably most useful to be aware of the effect when rates rise, as unless you’re on a certain type of mortgage rate (e.g. fixed), it will mean a rise in your monthly repayments. Luckily, it looks as if any changes to the interest rates in the near future will be downwards.
Of course, you don’t necessarily have to wait for the Bank of England to reduce rates to see your mortgage payments drop – why not speak to an independent mortgage broker to see if they can get you a cheaper deal than your current mortgage? Just try a few figures in the mortgage repayment calculator to see how much a cheaper mortgage could save you.