What Impact Will The Fall In The Base Rate Have On Your Borrowing?
You will no doubt be aware that the Bank Of England recently lowered the Base Rate by 0.5% to 0.25% to help businesses and individuals affected by the coronavirus that has caused havoc in many countries both in Europe and worldwide. So, how will this drop in the interest rate help?
Well, if you are a business owner, it is possible that you have an overdraft facility. If this is the case then your lender may have lowered the interest rate you are paying meaning that should you use your business overdraft facility you will pay less interest. If you have a fixed rate loan then the drop in the Base Rate will not make any difference to the amount of interest you pay. However, if you have a variable rate loan then you may find your lender decides to drop the rate thus saving you interest.
Your business may have a commercial mortgage in place that, if attached to the Base Rate, may see the lender decide to lower the interest rate that you pay on the borrowing.
On a personal basis, if you are a company director or are self-employed, you could find that your mortgage lender that provided finance to buy your residential property is agreeable to lowering your mortgage rate if you are on a variable rate of interest. If you are on a fixed rate of interest then you will no doubt find that the interest rate will
not change and your repayments will stay the same. If you have a personal overdraft facility that you utilise then you should pay less interest if the interest rate is being lowered. If you have a credit card then you may find that the interest has been reduced thus lowering future interest amounts.
In summary, the fall in the Base Rate should prove of benefit to many businesses and their owners here in the UK.