One Million Face Mortgage Shock
Mortgage brokers Charcol warn of rises in mortgage payments for those on annual rate review plans
9th December 2004
Around a million UK mortgagepayers face a steep rise in their monthly repayments in January according to mortgage brokers Charcol, as the past year's interest rate rises kick in all at once.
The hike will affect those with an annual interest rate mortgage, where the rate is fixed for 12 months at a time.
Holders of these mortgages will have been paying repayments calculated 12 months ago, when the interest rate stood at a low 3.75%. A series of rises over the last 12 months now sees it stand at 4.75% - almost a quarter higher.
Charcol estimates that on a typical mortgage of £100,000, the rate rises will amount to an extra £83 a month - quite a jump when it's not introduced gradually over a year.
Further, annual review rules allow shortfalls in interest charges to be made up at the end of every 12 month period, so mortgage payers who've been paying at the old 3.75% rate for a full 12 months could see their rates rise by even more than 1% to make up the shortfall.
Read More: BBC News
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