There has been good news for contractors who are hoping to secure mortgages as recent changes to the way that the market is shaping up have made it more likely that they will be able to enjoy decent rates. Help to Buy ISAs have also been announced, whereby the government has made provision for first time buyers to have their deposit savings topped-up by £50 for every £200 deposited in an ISA account. This goes some way to offsetting the interest rates which seems inevitable in the near future and may provide some level of reassurance to those who are concerned about rates going up towards the beginning of next year.
This means that first time buyers could be in line for some financial benefits this autumn as Help to Buy ISAs will become available from high street banks and the government will be contributing 25 per cent to any savings deposited in them up to a total contribution of £3,000. This means that those who are hoping to get onto the property ladder can put £12,000 into these ISAs and benefit from the additional help which was announced in the Chancellor’s pre-election Budget. Contracting couples can have an account each, as the limit only applies to each individual, meaning that a pair who both work for themselves could save up to £15,000 each for a total deposit of £30,000.
There are also a record number of contractors who are considering re-mortgaging in an attempt to beat the hike in interest rates that is being predicted by the tabloids. Lenders are already starting to raise their rates as the base rate increase looks set to happen in the New Year, and both fixed and variable rate products are likely to see changes as the swap rates that lenders use when borrowing money from each other to fund mortgages are also in flux.
Mark Carney, governor of the Bank of England, has been the source of much of the speculation about the rise in interest rates, lending credibility to the rumours that base rate increases could level out at around half the historic average over a period of time.
Contractors who are keen to limit the impact of the proposed rises should consider their options carefully, especially given that around two thirds of all borrowers are on a variable rate mortgage, meaning that any change in interest rates will be felt immediately in their repayments. For many, the solution to that will be to secure a fixed rate mortgage as soon as possible in order to ensure that their payments will not fluctuate, so this will no doubt be a popular option for contractors who want to have a little security in the near future.
If you are concerned about how a rise in interest rates could affect you, then speaking to an experienced contractor accountant could help you to get a handle on your finances and understand more about the potential long term implications. Call our friendly team today on 01253 362062 or email us at firstname.lastname@example.org