Simply Business - Insurance for your business

Call Us0333 0146 683
Our opening hours
Knowledge centre

How landlords can tackle the UK interest rate rise in three simple steps

2-minute read

How landlords can tackle the UK interest rate rise in three simple steps
Mollie Millman

Mollie Millman

7 November 2017

Landlords’ profits have come under further pressure following the rise in interest rates by the Bank of England to 0.5 per cent.

The bank raised rates by 0.25 per cent, the first time in a decade last week. And more increases could be on their way with the bank’s deputy governor Ben Broadbent saying he anticipates a ‘couple’ more hikes to get inflation - which is currently at 3 per cent - back on track.

With landlords already facing punitive tax changes and increased regulation, how do landlords maximise their profits in the new interest rate climate?

1. Check your current mortgage rate

The first thing to do is to check the mortgage rate on your buy-to-let mortgage and how far through your initial deal you are.

Take a look at how your current rate compares to deals currently available in the marketplace as you may find cheaper alternatives.

If you have not come to the end of your initial deal, there is a chance you may not be able to switch deals without a financial penalty. However, if you are already at the end of the initial deal, you will be free to switch.

This may be a good option if you have slipped onto your lender’s standard variable rate following the end of your initial deal.

This standard variable rate may be higher than you have been paying and so your monthly mortgage payments may have increased. Researching cheaper mortgage options could help you make some savings on your mortgage payments each month.

2. What are your future mortgage options?

If you’ve decided to remortgage, consider what type of deal you want next, including whether it’s fixed rate or tracker, repayment or interest-only, and with the same mortgage term or longer.

Fixed rate mortgage deals tend to be more expensive than variable rates as they fix your monthly payments, safeguarding you against any future interest rate rises.

There is also the issue of whether to opt for an interest-only mortgage. These have been the most popular type of buy-to-let mortgage as they allow landlords to offset the monthly mortgage payments against tax.

However, the Government’s decision to reduce the amount of tax relief available to landlords during the next four years means this option is less valuable to landlords than it once was.

You will need to consider if you want to have paid the capital off at the end of the mortgage term - and if so, whether a repayment mortgage is more suitable for your situation.

3. Is it worth paying a large mortgage fee?

The cheapest rates tend to come with the largest fees. This is because banks need to make money one way or another on each deal they offer.

However, in general, the bigger the mortgage amount, the less effect the fee has on the total amount you are borrowing.

It is also worth remembering that you’ll pay fewer fees over the full term of a mortgage if you opt for a longer-term on your initial deal.

Remember to seek expert advice before making any financial decisions.

Get set with tailored landlord cover

Over 200,000 UK landlord policies, a 9/10 customer rating and claims handled by an award-winning team. Looking to switch or start a new policy? Run a quick landlord insurance quote today.

Start your quote

We create this content for general information purposes and it should not be taken as advice. Always take professional advice. Read our full disclaimer

Find this article useful? Spread the word.


People also liked

Landlords could be targeted in new capital gains tax raid.

19 November 20202-minute read

Landlords could be targeted in new capital gains tax raid

Landlords could be hit by another massive tax raid, as the Office of Tax Simplification outlines its recommendations for an overhaul of…

Read more

Keep up to date with Simply Business. Subscribe to our monthly newsletter and follow us on social media.

Subscribe to our newsletter


Popular articlesBusiness resources from FarillioGeneral businessGuestInsuranceLandlordLandlord resources from FarillioLegal and financeMarketingNewsOpinionProperty maintenanceTradesmanCovid-19 business support hub


6th Floor99 Gresham StreetLondonEC2V 7NG

Sol House29 St Katherine's StreetNorthamptonNN1 2QZ

© Copyright 2021 Simply Business. All Rights Reserved. Simply Business is a trading name of Xbridge Limited which is authorised and regulated by the Financial Conduct Authority (Financial Services Registration No: 313348). Xbridge Limited (No: 3967717) has its registered office at 6th Floor, 99 Gresham Street, London, EC2V 7NG.