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Get anything you do not understand explained with everyday examples, then a few questions to check you got it.
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In one line: a rate rise makes borrowing money more expensive, and a mortgage is borrowed money, so your monthly interest goes up too. Everyday comparison: it is like the rent going up on something you rent. You are "renting" money from the bank, and a rate rise raises that rent. The more and the longer you borrow, the more extra you pay. Three key points 1. Mortgage rates usually follow the central bank's rate 2. With a variable-rate mortgage, monthly payments rise after a rate increase 3. A fixed rate is unaffected during its fixed period Common misunderstanding: a rate rise does not make what you have already repaid more expensive. Quiz ...
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