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After years of incredibly low interest rates, the Bank of England base rate now definitely looks to be on its way up.

Bank of England Governor, Mark Carney, suggested just a few weeks ago that the base rate – at just 0.5% for more than six years – could rise by the turn of the year.

And mortgage lenders have been quick to act on his words, pushing up rates on a number of deals.

Rising rates: the bad news

Some of the best mortgage deals available have become more expensive as lenders gear up for a base rate rise.

First Direct, for example, has increased the rate on its cheapest two-year fix* to 1.69%, up from 1.49% at the start of July. The mortgage has a £950 fee and you’ll need a 35% deposit.

Santander has also increased the cost of several offers by 0.1% and withdrawn a five-year fix at 2.19%, while Barclays has pushed up rates on its longer-term fixed-rate deals.

Rising rates: the good news

Yes, rates are rising. But don’t despair: there are still some great mortgage deals around.

And for once, the best deals are not necessarily linked to having a larger deposit.

We’ve crunched the numbers and found that, on average, mortgages requiring a 35% deposit are now cheaper than those asking for a 40% deposit. (Based on the top five products across all types of mortgage.)

While the average 60% loan-to-value (LTV) rate across fixed, variable and discount mortgages is 2.23%, the typical 65% LTV rate is now just 2.08%.

This means if you have a 35% deposit, you can snap up just as good a deal as someone with 40% equity saved up.

And the even better news is that you can often do this even if your current mortgage has up to six months to run.

Dan Plant, consumer expert at MoneySuperMarket, said: “Many lenders allow mortgage holders to reserve rates available now for up to six months for a small fee, so even those who still have some time left on their current deal can benefit.”

To fix or not to fix?

Nobody is expecting the base rate to shoot up from its current level of 0.5%.  But even a 0.25% rise could be costly if you’re on your lender’s standard variable rate (SVR), with monthly repayments increasing by an extra £264 per year, according to our number crunchers.**

What’s more, Carney has hinted that the base rate could hit 2% within the next couple of years.   You therefore need to be sure you can afford higher repayments if you opt for a variable-rate mortgage.

Factor in the fees

Whatever type of mortgage you choose, it is vital to work out the total cost of the deal, including any fees you have to pay to switch to it.

In our recent survey two-fifths of home movers said they had underestimated costs by around £5,000, so make sure you don’t forget to include them in your calculations.

Dan Plant said: “As always, prospective buyers need to think about the long term and work out the total cost of the mortgage, including both rates and fees, before committing to a deal.”

If you’re feeling a bit baffled about all the various costs of moving home, or you’re simply looking for some advice and tips, head over to our Home Mover Hub.

The best mortgage rates

If you’re after a fixed rate mortgage and have a deposit of 40%, the Post Office offers a top two-year fix at 1.05%***, with a £1,995 fee.

If you’d prefer to fix for longer, Nationwide’s 10-year fixed rate mortgage is priced at 3.14%**** and is available to those with a 30% to 40% deposit. It has a fee of £999.

Those after a variable rate deal should take a look at Chelsea Building Society’s two-year tracker at just 0.98% (BoE base rate + 0.48%)***** until October 31, 2017. You will need a 35% deposit to qualify and the fee is £1,675.

*First Direct - Reverting to standard variable rate currently 3.69% after two years. Overall cost for comparison is 3.5% APR. Early repayment charges apply during the fixed rate period. Other fees may apply, see T&Cs.

**The current average SVR for existing borrowers is 4.84%. On a typical £150,000 mortgage over 25 years, your monthly mortgage repayments would be £863. But if base rate rose by 0.25%, your monthly repayments could increase to £885, or £22 more a month.

***Post Office - Fixed until 30/09/2017 - Reverting to standard variable rate currently 4.49% after two years. Overall cost for comparison is 4.1% APR. Early repayment charges apply during the fixed rate period. Other fees may apply, see T&Cs.

****Nationwide - Reverting to standard variable rate currently 3.99% after 10 years. Overall cost for comparison is 3.5% APR. Early repayment charges apply during the fixed rate period. Other fees may apply, see T&Cs.

*****Chelsea - Reverting to standard variable rate currently 5.45% after two years. Overall cost for comparison is 4.8% APR. Early repayment charges apply during the initial two-year period. Other fees may apply, see T&Cs.

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Please note: any rates or deals mentioned in this article were available at the time of writing. Click on a highlighted product and apply direct.

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