Brits warned mortgage payments could be £10k a year more if interest rates surge

Brits have been warned if interest rates continue to rise then mortgage repayments will too.

Homeowners could pay almost £10,000 a year more on their mortgages if interest rates rise to 6% next year.

The Bank of England hiked its base rate to 2.25%, the highest level in 14 years as it hopes to bring down inflation.

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In the UK, the base rate is important because it is what the central bank charges other banks and lenders.

This impacts the rates banks charge customers, so when rates are higher, borrowing becomes more expensive.

If you have a tracker mortgage, your monthly repayments will move in line with the base rate.

Many standard variable rate (SVR) also become more expensive, but it's down to the lender to decide on putting rates up.

If you have a fixed-rate mortgage, then you'll be protected from any rises until your current deal comes to an end.

Those coming off a deal in the next few months, the expected future rises mean they face thousands more.

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Someone who bought in the first half of 2021 could see monthly repayments jump from below £900 to £1,696, if interest rates increase to 6%.

This adds up to around £800 extra a month, or £9,600 a year more, according to The Telegraph, who used the example of homeowners coming off a two-year fix.

It's worth shopping around for a new rate if you have six months or less to run on a fixed-rate mortgage.

Keep in mind banks have been slowly increasing their rates since November in anticipation of future rate hikes, so deals aren't as cheap as before.

Sarah Coles, senior personal finance analyst at Hargreaves Lansdown, said: "You can lock in a deal up to six months in advance and protect yourself from rises.

"Given the market turmoil, you may want to talk to a mortgage broker who is across the market and can track down the best rates."

Some lenders, including Halifax, Virgin Money and Skipton Building Society, pulled deals for new customers after the pound dropped to an all-time low against the US dollar.

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