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Fixed Rate Mortgages, Drop Lock Mortgages, Offset Mortgages - Business, Commercial & Buy to Let
12th December 2003
Protect Your Business Against Rising Rates
Last weeks decision by the Bank of England to raise interest rates came as no surprise however there is a wide perception in the market that continued rate rises are inevitable.
1. Switch to Fixed Rate Mortgages
As payments on variable/discount rate mortgages will rise in line with interest rates you should consider switching to fixed rates to insure against further rate increases.
2. Utilise "Drop-Lock" Rates
You could also consider a 'drop-lock' mortgage rate which gives you the benefit of a variable rate but additionally provides the option to fix the rate when it is convenient for you.
3. Consider Offset Mortgages
By switching to an offset business mortgage, where the interest on your mortgage is reduced by the funds in your business current account, (just like residential offset mortgages), you can reduce the capital that you pay interest on your mortgage, effectively counteracting interest rate rises.
4. Consider Leasing
Bank loans and overdrafts offer variable rates which will be affected by rising interest rates. A more attractive form of finance for you business needs is leasing where rates are fixed for the term of the lease.
5. Maximise Your Account Receivables
Whilst considering the risks to your business posed by rising interest rates, you should also consider the effect it may have on other companies you deal with. Check your account receivables for poor creditors and utilise professional debt collection companies if necessary to ensure you receive amounts payable before it is too late.
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