Interest rates have been rising since December 2021. But the recent rise, coupled with the higher cost of living, may mean you’re worried about how to support yourself and your family.

If you’re looking for a new mortgage you might be worried about whether you’ll be accepted by lenders. If you’d like advice on a new mortgage, a mortgage broker or lender will be able to help you or point you in the direction of someone who can.

If you have a mortgage already, you might be concerned about how you’re going to afford your mortgage payments, either now or in the future.

If you’re finding it hard to keep up with payments, it’s important you know what your options are and where to go for help and support.

If you’re worried about paying your mortgage, contact your lender as soon as possible. MoneyHelper has more information about the support available.
Mortgages affected by interest rate rises
There are many different types of mortgages. The impact that interest rate rises have will depend on what type of mortgage you have, or if you’re on a deal that’s about to end.

Tracker mortgages are linked to an external interest rate, such as the Bank of England’s base rate, which can change. If you’re on a tracker mortgage, you will already have seen an increase to your monthly payments due to recent base rate rises.

Variable-rate mortgages can rise at any time, as the interest rate is typically set by your lender and isn’t directly linked to an external rate. If you’re on a variable-rate mortgage, it’s likely that your monthly payments have already been affected.

Fixed-rate mortgages won’t immediately be affected by the recent rate increases. However, if you’re close to reaching the end of your deal, or want to re-mortgage, then the rise in interest rates is likely to affect you.

Getting a mortgage for the first time
If you’re taking out a mortgage for the first time, you may be worried about the process, and whether the higher costs of living are likely to affect your application.

Affordability checks
Taking out a mortgage is a big financial commitment, so lenders must check you can afford the repayments.

If your personal spending has increased due to the rising cost of living, it might reduce the amount lenders are prepared to lend.

Lenders will look at the money you have coming in (your income) and how much you have going out (your expenditure) to assess whether you can afford the repayments. They’re likely to ask for documents such as:

proof of your income
recent bank statements
proof of your deposit that you’ll use to buy the property
Lenders may also ask about any rent you’ve been paying, as this will help them understand your overall financial position. However, their main concern will be whether you can keep up with your mortgage payments when you’re no longer renting.

In many cases, lenders will also assess whether you’ll be able to afford your mortgage if interest rates rise in the future. This is often called a stress test.

If you’re accepted for a mortgage, the offer will normally stand for between 3 and 6 months, depending on the lender.