A household in Oxfordshire is preparing for a significant increase in mortgage costs when their fixed-rate term concludes in November.
The family’s monthly payments are set to rise by £430.
Amanda Taylor, 39, and her husband, aged 42, purchased their three-bedroom property for £365,000 in 2016.
The couple reside in the property with their son, who is five years old.
A deposit of £60,000 was contributed at the time of purchase.
In 2021, the family arranged a remortgage with First Direct, securing a five-year fixed-rate deal at 1.1 per cent.
The original monthly payments amounted to £870.
As the term approaches its conclusion in November, the family has committed to a new two-year fixed-rate mortgage at 4.8 per cent.
Under this new arrangement, monthly payments will increase to £1,300.
The household is among numerous borrowers transitioning from historically low five-year fixed-rate deals to considerably higher rates.
Data indicates that five-year mortgage rates have now reached an average of 6 per cent, representing the first time such levels have been recorded in three years.
Taylor, who operates a business in Oxford, described the situation as frustrating, noting that increased payments for identical accommodation prove galling.
She acknowledged that the family had benefited from an unusually low rate over an extended period.
The family indicated that the timing of the payment increase would prove manageable.
Their son has recently begun primary education, meaning the household no longer incurs nursery fees that previously ranged between £500 and £1,000 monthly.
Taylor stated that funds previously directed toward childcare costs would now be redirected toward mortgage expenditure.
She noted that the household had exercised caution regarding borrowing, opting for a property within their means rather than maximising their financial capacity.
The family noted that many borrowers who secured properties during the period of extremely low interest rates may have purchased larger homes than their financial circumstances would otherwise have permitted and are now encountering difficulties as rates have risen.
Taylor indicated that this situation did not apply to her household, which she described as modest.
To diminish the outstanding balance before the subsequent mortgage term expires, the household is exploring options for making supplementary overpayments.
Taylor revealed that she has been investigating methods to facilitate small additional payments and has been advised to utilise Sprive, a service offering cashback on gift-card purchases that can be applied toward mortgage overpayments.
Taylor explained that her mortgage agreement permits unlimited overpayments.
She anticipated that individual payments through this method would be modest but emphasised that even small contributions would prove beneficial.
She expressed hope that these measures would assist in reducing the overall mortgage balance during the upcoming two-year term.
The family intends to accumulate savings throughout the new two-year mortgage period to prepare for the subsequent rate review when the current deal concludes.