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How to protect yourself from the imminent threat of rate hikes

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Louise McBride [19659004Howtoprotectyourselffromthethreatofratehikes[19659005] Independent.ie </p>
<p> Homeowners could see their mortgage bills rise by a few hundred euros a month in a few years – if, as expected, the rates of European interest starts to rise in late 2019 or early 2020. The extent the mortgage bills will increase depending on the size and cost of the mortgage the borrower – but a series of Rate hikes could easily make hundreds of others pay their mortgage back every month in the early 2020s </p>
<p> : //www.independent.ie/business/personal-finance/how-to-protect -yourself-from-looming-threat-of-rate-hikes-37091616.html </p>
<p> https://www.independent.fr/busines s / personal-finance / article37091615.ece / 7ff85 / AUTOCROP / h342 / 2018-07-08_bus_42170286_I1.JPG </p>
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Homeowners could see their m If European interest rates start to rise to the By the end of 2019 or early 2020, mortgage bills will rise by a few hundred euros a month in a few years – if interest rates rise as expected. cost of a mortgage the borrower – but a series of rate hikes could easily see many pay hundreds of others to pay off their mortgage each month in the early 2020s that they do not are today.
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<p> The European Central Bank (ECB) is expected to increase its main refinancing rate – the rate that has a direct impact on mortgage repayments of borrowers with mortgage trackers and which also often affects the cost of variable mortgages – end 2019 or Au beginning of 2020. </p>
<p> Some economists think that after a few years of rising interest rates, the ECB refinancing rate could rise to 2.75pc or 3.5pc, according to a poll conducted by The Sunday Independent. As the rate is currently zero, such an increase would put many homeowners under pressure. </p>
<p> For example, a homeowner on a 30-year-old tracker mortgage of $ 250,000 could see his mortgage repayments increase by almost $ 450 if the ECB rate rose to 3.5pc; while an owner of a variable mortgage of this size could see his repayments increase even more. </p>
<p> European interest rates have reached record lows for nine years – so many homeowners have never seen interest rate hikes before. However, it is not inconceivable that the rates rise to 3.5pc: almost 10 years ago, the ECB rate was 3.75pc; in June 2000 it was 4.25pc </p>
<p> So with at least 14 months before European interest rates start to rise (baduming they do), what can you do in the meantime to protect you against the rising costs of borrowing? ] Secure Your Mortgage </h4>
<p> Fixed rate mortgages are a good way to protect yourself against future interest rate hikes because your monthly repayments will stay the same for a given period, regardless of rate fluctuations. </p>
<p> Lenders have reduced interest rates on their fixed rate mortgages in recent months, a fixed mortgage could cost you a lot less than a variable. You can now secure your mortgage for three or five years at a rate of interest of 3pc or less, even if you borrow up to 90pc from the value of your home – depending on your lender. In contrast, the cheapest variable rate for such a borrower is the rate of 3.15pc of AIB; the most expensive is the 4.5pc rate of Bank of Ireland. Ulster Bank, KBC and Bank of Ireland are among those offering fixed rates of three years or less over three years. </p>
<p> For those wishing to set a fixed rate as long as they can, Ulster Bank annual fixed rate between 2.99 and 3.29 points; while Bank of Ireland and KBC offer 10-year fixed rates of less than 4pc. If you borrow less than 60 pc from the value of your home at KBC, you could set your mortgage for 10 years at a rate of 3.05 pc. "We've never had a 10-year fixed rate at less than 4pc in the Irish market before," said Michael Dowling, general manager of Mortgage Brokers, Dowling Financial. </p>
<p> "If you are not on a fixed rate or fixed rate tracker A fixed rate is an opportunity for borrowers to protect themselves against rising rates and revising the interest rate with their current lender LTV is the percentage of the price of real estate borrowed and lower interest rates are usually available for those with a low LTV.If you have paid off your mortgage for several years, this could, in Combining with the rising real estate market, you can have a LTV much lower than when you first borrow.Do not repair your mortgage if you plan to move quickly, because a break fee is usually charged if you get a fixed mortgage sooner than expected. </p>
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<p> It may be wise to get a cheap fixed rate mortgage now. Lenders start raising their fixed rates at the APA. close to the prospect of a rise in ECB rates. Indeed, KBC has already done so with its fixed rates at 10 years. For example, before last March, it was possible to obtain a fixed rate of 10 years of 2.95 pc from KBC if you borrowed up to 60% of the value of your home. This rate is now 3.05pc. </p>
<h4> Mortgage overpay </h4>
<p> Overpaying your mortgage can now help reduce the amount you owe as interest rates rise. This should reduce the impact of higher interest rates on you: the higher your mortgage, the higher the impact of rising interest rates – and vice versa. </p>
<p> You can overpay your mortgage by paying a lump sum or increasing the size of your monthly payments. Talk to your lender to make sure you take full advantage of the overpayments you make. Be careful of making overpayments if you have a fixed mortgage – you may have to work within certain limits or you may not be able to pay your loan too much. </p>
<h4> Avoid Credit Supplements </h4>
<p> Do not be tempted to top up your mortgage – or take a large mortgage – while interest rates are low. Instead, do what you can to reduce what you owe on your mortgage – for example, overpaying an existing loan or borrowing up to 80 pc of the value of your home (if you can) </p>
<p> the interest rates on the rise are those who borrowed 90pc from the value of their home and those who borrowed up to the salary limit [mortgage lending]"said Dowling. "Before borrowing up to your salary limits, ask yourself if you will be able to amortize interest rate increases." </p>
<h4> Sorting Other Loans [19659015] Unsecured credits, such as personal loans, credit cards and overdrafts. become more expensive if the ECB rate rises. In addition, lenders could raise interest rates on some loans at a much higher rate than the ECB increases its refinancing rate. "Interest rates that underlie car purchase contracts could rise to a proportionally higher level than the ECB could apply," said Ronan Coburn, forensic accountant at the bank's consulting firm. Dublin, The Bottom Line </p>
<p>. such as credit cards), or clear them before interest rates are higher – or refinance them so that you can repay the loans cheaper and faster. "When interest rates start to rise, you will have less income available to pay back the loans – so take advantage of it to do it now," Dowling said. </p>
<p> With nearly 30,000 homeowners behind on their mortgage for over two years, still many people are struggling with debt. "Many of these mortgage accounts have been in arrears for more than five years, some for ten years," said Paul Joyce, Senior Policy Analyst at the Free Legal Advice Centers (FLAC), which offers legal advice to people in debt. </p>
<p> These nearly 30,000 homeowners who are already struggling to pay off their mortgage may find it even harder to deal with their loans when interest rates start to rise. </p>
<p> If you can not repay your debts because you do not have enough income, try to find a solution with your creditor. "Sit down with your bank and see if it will restructure the loan – so that you can be brought back to a situation where you can afford the repayments," said Michael Laffey, regional director of financial advisory and budgeting service. of the MSP. ). "You could for example extend the term of the loan – or restructure three or four loans in one." However, if restructuring is not an option (for example, if you have incurred too much debt), you may need to consider a personal insolvency contract. </p>
<p> "It must be feared that once the interest rate changes, there will be a series of rate hikes," Joyce said. "Economically, things are getting better, but there are many people in precarious employment and many people struggle with high rents, the idea that the rising tide has raised all boats. is not something we still see. "</p>
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