Housing marketNews Elise  1 september 2022

Does the higher mortgage interest rate affect my mortgage?

Mortgage rates have started to rise sharply this year. This may affect your mortgage, but what will you notice? You will not be affected by the increase if you have a fixed agreed mortgage rate in your mortgage. There are, however, a number of situations in which the higher mortgage interest rate may affect you. An example is renovating your house or applying for an extra mortgage.

A higher mortgage interest rate need not be a problem

The higher mortgage interest rate does not affect your monthly costs, if you still have a fixed mortgage interest rate for a longer period. For example, it has been agreed with the lender that the mortgage interest rate is fixed until 2030. As long as you do not buy another house or take out any extra loans, you are safe in terms of monthly costs. The fact that the interest rate is going to rise more, could cause house prices to fall in the longer term. All homeowners will notice this.

How long is your mortgage fixed?

If your fixed interest rate expires soon, a higher mortgage interest rate will have consequences for your mortgage costs. At the beginning of 2022, you could still opt for a new fixed-interest period of 20 years at 1.75%. Is your fixed-interest period about to expire? Then you will have to deal with much higher rates at which you can fix the interest again. You can opt for a short term, but you can also fix the interest again for 10 or 20 years;

Refinancing a mortgage is less advantageous

In recent years, when mortgage rates were very low, you could save money by refinancing your mortgage. Currently, there are fewer benefits to be had, so it's not being done as much. It is also a way of getting rid of a form of mortgage in your current mortgage. For example, you might have a repayment-free mortgage and want to convert it to a mortgage with monthly repayments.

Use of excess value more expensive

Taking out a second mortgage is more expensive due to the higher mortgage interest rates. However, it is still possible to use your surplus value for a renovation or to make your home more sustainable, but at higher monthly costs. So you use your surplus value by taking out a second mortgage. The lenders give you, as it were, an advance on the surplus value of your house.

Take your mortgage with you when you move house?

Do you have plans to buy another house and currently have a low mortgage rate? Usually it is possible to take your mortgage with you to the next house. Not all mortgages can be taken along, this differs per mortgage. This means that you will suffer from the higher mortgage interest rate in your new mortgage.

Do you have plans to sell your house? Our estate agents will be happy to help you with the sale. Or get proper advice from a mortgage adviser. Do you need mortgage advice? Then get in touch with one of the advisors at Freek Mortgage. They will be happy to help you!

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