Richard Ollive, Specialist Financial Adviser at Wesleyan Financial Services, reveals why dentists shouldn’t delay the remortgage process when coming to the end of a mortgage deal…
It goes without saying that dentists currently have a lot to deal with.
Challenges within dentistry, such as recruitment, NHS backlogs, and CQC inspections, are compounded by what we’re seeing in the wider economy and the cost-of-living crisis.
One way you can proactively strengthen your financial foundation is to minimise the risk that rising interest rates pose.
The growing threat to homeowners
Since December 2021, we've seen six incremental rises in interest rates, reaching 1.75% in August 2022. This is the biggest rise we've seen for 27 years.
The rise in interest rates is being introduced to slow the rate of inflation, which is expected to exceed 11% this autumn, and is impacting the British population's purchasing power of savings. While increasing interest rates is aimed at combatting price rises, it will add pressure to already stretched households, with mortgage rates rising.
Around 80 percent of UK mortgages are on fixed-rate deals. Borrowers on these deals will not see a change in their repayments yet. However, when they come to the end of their existing deal, they may find they have to pay more for their next loan. At least one-third of mortgage holders on fixed-rate contracts are likely to see their repayments rise within two years as their current terms expire, based on data from the Bank of England.
Those on tracker mortgages will see an increase in monthly repayments whenever the base rate increases, as will many of those on standard variable rate (SVR) mortgages.
What you can do in response
For homeowners who are within six months of renewing their mortgage, it’s best to act quickly to secure the right rates for your circumstances. There are lenders out there who can issue fixed rate offers that last six months, potentially allowing you to lock in a more favourable rate ahead of further increases in interest rates.
Tracker mortgages are a good option when interest rates are low and steady, however, expectations are that interest rates could reach three percent in 2023. SVRs can go up or down at any time, making them tricky to budget for on a monthly basis. Applying for a fixed-rate mortgage is something to take into consideration with the fluctuation of general household prices to bring in some predictability to your outgoings.
Speak to a specialist
Applying for a mortgage as a dentist can be tricky, with many lenders not understanding the nature of a career in dentistry.
Fortunately, you may have the option of applying for a professional mortgage.
Dentists are one of a select group of professionals that can benefit from this type of mortgage. As your job is associated with higher long-term earnings, you can often enjoy competitive interest rates and mortgage offers.
At Wesleyan Financial Services, we have access to many professional mortgage lenders. Book a no-obligation financial review and we can let you know if you’re eligible for a professional mortgage and help you with your application.
Your mortgage is secured on your home. Your home may be repossessed if you do not keep up repayments on your mortgage.