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Rate changes and your mortgage

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Find out what Base Rate is, how a change could affect your repayments, and what options you have available to help you to plan ahead.

What is the Bank of England Base Rate?

The Bank of England Base Rate (BBR) represents the rate at which the Bank of England lends to other financial institutions; it is reviewed several times a year by the Monetary Policy Committee (MPC)

How do Bank of England Base Rate changes impact mortgages generally?

The current interest rate on any variable rate mortgages linked directly to the Bank of England Base Rate will go up or down automatically in line with any Base Rate change.

Standard Variable Rates:

Many banks have a Standard Variable Rate (SVR) which they can change at their discretion and this is normally influenced by the cost of their borrowing. The SVR normally determines the variable interest rates and reversion rates for each lender. So for most variable rate borrowers it’ll depend on their lender whether their current interest rate will change following a Base Rate change as lenders can choose when to put this up or down. Fixed rate borrowers in their deal period won’t see a change following any Base Rate or SVR changes.

Aldermore’s SVR is the Aldermore Managed Rate (AMR).

LIBOR:

LIBOR is the London Interbank Offered Rate which is the average interest rate for inter-bank lending and is reviewed every 3 months. Any mortgage rates linked to LIBOR will go up or down automatically in line with any change to LIBOR.

How would a change in the Bank of England Base Rate affect Aldermore’s mortgages?

Please note Aldermore will always write to customers whose current interest rate and monthly payment amount will change.

Bank of England Base Rate tracker mortgages

Mortgages with a variable rate linked directly to the Bank of England Base Rate will go up or down automatically in line with any Base Rate change.

Mortgages Linked to the Aldermore Managed Rate (AMR)

The Aldermore Managed Rate is our Standard Variable Rate and is not directly linked to the Bank of England Base Rate. The Aldermore Managed Rate is set by Aldermore and term Variable and Discounted Rate mortgages go up or down in line with the Aldermore Managed Rate. The Aldermore Managed Rate can be changed by Aldermore at any time.

Mortgages Linked to LIBOR

The variable interest rates and reversion rates on our commercial and specialist buy-to-let and mortgages are linked to LIBOR, so if LIBOR changes any Aldermore mortgages linked to it would subsequently change.

Our Fixed Rate Mortgages

The interest rate on Aldermore’s fixed rate mortgages will not be affected by a change in the Bank of England Base Rate.

Customers with this type of mortgage would not see a change in their monthly repayment amount for the duration of their fixed deal.

Customers coming to the end of their fixed deal period automatically move to a variable rate linked to the Aldermore Managed Rate (AMR), or LIBOR.

 

How to calculate a change to your payments

Our calculator can provide some guidance as to how your payments will be affected by any changes. Please note this will provide approximate guidance, as this will not take into consideration your account specifics, such as your payment date, any additional or over payments made and the exact number of payments you are required to make to repay your mortgage.

Step 1 – Using your current mortgage balance, current interest rate and the approximate term remaining on your mortgage, please calculate your approximate current payment.

Step 2 – Increase or decrease the interest rate by the percentage you would like to compare, for example by 0.25%.

Please note this will only provide you with a guide to how much your payment could be affected following a change to your current interest rate.

YOUR HOME MAY BE REPOSSESSED IF YOU DO NOT KEEP UP REPAYMENTS ON YOUR MORTGAGE

The content published on this website is intended to provide information only. The reader should seek advice from experts on the subject matter and independently verify the accuracy and relevance of any information provided here before relying upon it or using it for any reason. You can view our terms and conditions here.

  • Personal
  • Mortgages
  • Personal Mortgages

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