Protect your mortgage from interest rate hikes

For over a year now, anyone on a tracker mortgage has enjoyed incredibly low interest rates. But rates will eventually rise, leaving you with much bigger monthly repayments. Here, Ruth Jackson explains how to protect yourself.

For over a year now, anyone on a tracker mortgage has enjoyed incredibly low interest rates. Many people are paying just one percentage point above the base rate of 0.5%. And those lucky borrowers who took mortgages out with Woolwich and Cheltenham & Gloucester in 2006 and 2007 are on rates of just 0.17 points over the base rate. But how can you protect yourself if interest rates rise and leave you facing far bigger monthly repayments?

One option is mortgage insurance. The Interest Rate Protector, launched last week by mortgage advisers John Charcol, pays part of your mortgage repayments if interest rates rise above a set level. It's not the first product of its kind, but is drawing a lot of media attention.

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Ruth Jackson-Kirby

Ruth Jackson-Kirby is a freelance personal finance journalist with 17 years’ experience, writing about everything from savings accounts and credit cards to pensions, property and pet insurance.

Ruth started her career at MoneyWeek after graduating with an MA from the University of St Andrews, and she continues to contribute regular articles to our personal finance section. After leaving MoneyWeek she went on to become deputy editor of Moneywise before becoming a freelance journalist.

Ruth writes regularly for national publications including The Sunday Times, The Times, The Mail on Sunday and Good Housekeeping, among many other titles both online and offline.