As interest rates rise again for the second time in 3 months, there are several things to know for the existing homeowners and prospective buyers.

What are the keynote takeaways?

• The interest rate spiked from 0.25% to 0.5%. The Bank of England increased it for the second time in 3 months.
• Buyers with variable rate mortgages (VRM) will face extra monthly mortgage repayments. Currently, there are about 2 million homeowners with VRMs.
• For a typical £200k mortgage, the increased interest rates mean a £24 uplift in monthly mortgage payments.

Increased interest rates in details

The Bank Rate is the official cost of borrowing money. Recently, The Bank of England has increased the interest rates from 0.25% to 0.5% for the second time in 3 months.

This change results in rising monthly mortgage repayments for homebuyers with variable-rate mortgages. Approximately 2 million homeowners with VRMs will see their monthly payments increase by an average of £24 for a £200k mortgage.

A mortgage is arguably the most popular payment option for properties right now, especially for the new builds in London. When done wisely and with a sensible approach, mortgages might be a favourable solution for stepping onto the property ladder.

The recent changes in the interest rate come during already challenging settings for the buyers and homeowners. Currently, consumers are struggling with rising food and energy prices, while we might see the National Insurance contributions increase in April 2022.

On average, energy costs might reach £1,971 in 2022, a 54% increase. This follows the changes by Ofgem to the charges of energy companies.

Worryingly, The Bank of England revealed the most significant drop in disposable income for families in 30 years.

What are the reasons behind interest rate spikes?

Perhaps the main driver for the rising interest rates is inflation – it hit a 30-year record in December 2021 and reached 5.4%. The Monetary Policy Committee or MPC changes the rates to control inflation.

In simple words, inflation means the price growth levels for the things we buy. According to the Consumer Prices Index, MPC needs to maintain the inflation level at 2%. But the inflation now is more than 100% higher than the target goal and might reach even higher peaks of 7% in the upcoming Spring of 2022.

The MPC consists of 12 members who vote on the changes for the interest rates. During the latest meeting, four of them voted to increase the Bank Rate even further, to 0.75%. This means we might expect new spikes in the interest rates soon.

How might rising rates affect you?

As mortgages often seem like a favourable payment option for new builds and off-plan property, rising interest rates might significantly affect the budgets of prospective and existing homeowners.

However, only people with mortgages that depend on the Bank Rate will face changing monthly repayments for their mortgages. For instance, those buyers with VRMs need to pay more when interest rates rise and vice versa. These are mortgage products such as tracker deals and standard variable rates (SVR) mortgages.

Currently, some 850k homeowners have tracker mortgages, with a further 1.1 million with SVRs. This is according to the numbers from UK Finance.

If buyers have a £200k mortgage, they will see a £24 jump in monthly mortgage payments, in line with the latest spike in interest rate. When we add the previous uplift in the rates, the total monthly increase reaches almost £40.

In turn, 74% of mortgage holders have fixed-rate products. Such mortgages are not following the changes to the interest rates, so there is no increase in monthly repayments. A fixed-rate mortgage typically lasts from 2 to 5 years.

Advice to homebuyers and homeowners

• Holders of fixed-rate mortgages have nothing to worry about until the end of the mortgage term.
• Worried holders of the tracker mortgages might benefit from finding a favourable fixed-rate deal. But before that, make sure there are no fees for the earlier ending of the deal.
• As for the SVR, buyers and homeowners can opt for new mortgages at any time.

Despite rising interest rates, savvy buyers can still find favourable mortgage products in the market. On average, a 2-year fixed-rate mortgage offers a 2.44% interest rate. In turn, a five-year fixed rate product is around 2.71%, and a 10-year fixed-rate mortgage is 2.85%. By comparison, an average SVR has a 4.46% interest rate.

If homeowners or buyers struggle with the monthly mortgage repayments, they should contact their lender promptly. Lenders can support the customers with payment holidays or provide a temporary interest-only mortgage. Once the payment is missed, the options are very limited.

While there is a growing demand within the concierge and fintech space, not many have taken the initiative to offer a cutting-edge solution to what most would consider first-world problems. However, one former football player has decided to make a change by starting a company that provides valuable solutions to clients looking to get more done in less time while having access to everything they need in one location. 

Switching Careers

Hayes Thomas initially had a football career, but a contract issue and injury sustained would leave him falling out of love with the sport. While falling out of love with football, he started growing a passion for becoming an entrepreneur and decided to start a business out of necessity. Having spent a lot of time with his colleagues throughout his football career, he knew the demand existed for a service that would provide busy individuals with access to great things, such as the best nightclubs in the area, hotel flights, and more. Using that valuable knowledge to his advantage, Hayes Thomas came up with the brilliant idea to start HCT Finance.

“I had this genuine passion for becoming an entrepreneur and starting a business that would resolve problems for people living hectic lifestyles. HCT is a concierge service like none other. We’re taking lifestyle management to the next level,” shared Hayes Thomas. “We’ve developed this service that works as a stress-free solution to clients, helping them manage their lifestyles with ease. They can book flights, get car rentals, and even check their banking information in one spot. It’s convenient because they can access everything they need through one platform instead of relying on multiple apps to help them.”

Creating a One-Stop Shop for All Things Lifestyle

The career switch and start of HCT turned into such a massive success because it’s something new and convenient for clients to use, with nothing else like it available. “The company was born out of necessity. People with busy lives don’t have a lot of time to complete certain time-consuming tasks, so we’ve eliminated much of the work by doing it for them and providing them with the information they want and need. In addition, if we can negotiate discounts with various companies, we pass those savings on to our clients to keep more money in their pockets,” said Hayes Thomas. “Not only do people enjoy the convenience of what we offer through our membership, but they also enjoy knowing that we work hard to ensure they’re taken care of and not exploited.”

Because the company continues to excel while gaining thousands of new clients despite the global pandemic, it’s clear to see that HCT Finance is taking the concierge and fintech sectors by storm. With banking recently added to the list of services, clients can now keep track of their cards and monitor spending within seconds. 

Hayes Thomas has big plans to continue to expand operations while adding even more services to the list in the future for the convenience of clients who benefit from having quick and easy access to these services when they need them.

Consumers are always looking for ways to shop with purchasing flexibility. Zilch has designed a virtual card and app to meet this need. The Zilch card allows you to buy now, pay later (BNPL) using a simple, interest-free payment plan. Read on to learn how the Zilch card works and how it could potentially save you money.

How Does Zilch Work?

Zilch differs from other buy now, pay later services in that it provides a virtual Mastercard that can be used on the Zilch app or saved in mobile payment and digital wallet services such as Apple Pay, Google Pay, and Samsung Pay. Once you’ve loaded the Zilch card into your mobile wallet, you can use it to shop online or in-store anywhere you would use a traditional Mastercard.

The interest-free payment plan allows Zilch users to make Pay in 4 purchases with an initial payment of just 25% of the total cost. The remaining 75% is spread across three equal payments, with one payment made every two weeks over a six-week period.

0% APR Payment Options

Zilch has partnered with thousands of top retailers to offer its users the ability to buy now, pay later with 0% APR* at thousands of stores. Zilch retailers are found across a myriad of industries, including fashion, food and groceries, home and electronics, and even travel and events. Whenever you use your Zilch card at one of these partner retailers, you can choose to Pay in 4 with the six-week, 0% APR* plan.

Let’s consider an example of what this would look like for easyJet, a Zilch partner. If you spend £400 on an easyjet flights using a Zilch card, here’s what your payment plan would look like:

Initial purchase: £100

Week 2: £100

Week 4: £100

Week 6: £100

Total cost: £400

With Zilch, the total cost of the purchase remains the same, but it’s divided into four equal payments and spread over a longer period, giving Zilch users the flexibility to make purchases when they need to without the stress of interest or fees at Zilch-partnered stores.

If you’d rather pay for your purchase in full immediately, you can use Zilch’s Pay in 1 in the same way you’d use your bank card, subtracting the total cost of your purchase from an available balance personalized to you. Zilch users can completely pay for a purchase at any time via Pay in 1 with no penalty, so you don’t have to wait the full six weeks if you don’t want to do so. In fact, you’ll earn 2% cashback in Zilch Rewards instantly after paying in full with Zilch.

Zilch Rewards

As you make purchases with a Zilch card, you accumulate Zilch Rewards that can be applied to future purchases. Zilch users receive 100 Zilch Rewards for every £1 that they spend. You can also earn Zilch Rewards by referring friends.

Zilch Rewards differ from most traditional credit card rewards programs in that you don’t need to pay any annual fees or interest to be eligible for them. All you have to do to earn rewards is complete payments on any purchase you make with your Zilch card. When you choose the Pay in 1 option at checkout for any purchase you make with a Zilch card, you earn 2% cashback in Zilch Rewards.

You can apply Zilch Rewards to your purchases for both online and in-store shopping by toggling a simple switch in the Zilch app. When Rewards are enabled, they’ll be automatically applied to reduce the cost of any purchases you make, whether you’re using the app to shop at an online store or shopping in-store using the Zilch virtual card to Tap and Pay.

Shop In-Store or Online

Because Zilch is a virtual Mastercard, you can use it just as you would a traditional card to shop in-store. While it’s not a plastic card, it can be easily added to your digital wallet for Tap and Pay. For Zilch users, this is a more environmentally friendly alternative to using plastic cards that ultimately end up in landfills. With the widespread acceptance of digital wallet services, there’s no loss of convenience.

Whether you’re using the Zilch app to Tap and Pay at a Zilch partner retailer store like Iceland, or purchasing products online from participating brands like Nike or Apple, you’ll be eligible for the interest-free payment plan and eligible to earn Zilch Rewards on your purchase.

Shopping online is easy using the Zilch app. You simply search for the online store in the app and Zilch lets you know if the store is one of the thousands of leading online stores that partners with Zilch, such as Amazon or eBay. If it is, then your purchase is eligible for the 0% APR* buy now, pay later option. If the store is not a Zilch partner, you can still use your Zilch card through the Zilch Anywhere service, but your purchase may be subject to a small fee of up to £2.50.

Zilch Anywhere

You may be wondering how Zilch can offer interest-free payment plans while other buy now, pay later companies rely on charging interest to make a profit. The answer is that Zilch partners with companies that pay Zilch when you use your Zilch card to shop at their stores. These companies value your business and pay Zilch so that you don’t have to, which means that Zilch can offer flexible payment plans without relying on interest or fees.

Zilch Anywhere allows you to pay using your Zilch card at any online store or in-store location that accepts Mastercard. If the store isn’t a Zilch partner, you’re still eligible for the Pay in 4 plan, but you’ll be charged a small fee up to a maximum £2.50.

For example, if you make a £400 purchase at a non-partner store, you’ll pay £102.50 at checkout, followed by 3 equal payments of £100 over the standard six-week period, for a total cost of £402.50.

Pay Zilch. Buy Now, Pay Later. Earn Rewards. Anywhere.

The Zilch virtual Mastercard is a tool that can provide you with financial flexibility and a responsible payment plan, saving you money as you earn rewards. To recap, here are the card’s key features:

— Pay in 4 offers the ability to make equal payments over a six-week period with 0% APR* or fees when you shop online or in-store at a Zilch partner store. Zilch partners pay a small fee when you shop so you don’t have to.

— Earn Zilch Rewards whenever you use your card, including 2% cashback when you choose to pay for your purchase in full with the Pay in 1 option at checkout.

— Use Zilch Anywhere to make purchases at any online store or in-store location where MasterCard is accepted. You can pay using the Pay in 4 plan for a small fee of £2.50.

*Please spend responsibly. Credit is subject to status, 18+, UK residents only. T&Cs apply. Zilch No fees, 0% APR at all eligible stores. At non eligible stores, Zilch Anywhere applies a fee up to £2.50 (max) per transaction, 11.5% APR Representative based on a loan of £400.