What could Brexit mean for your finances?

As you’ll know by now, the UK has voted to leave the EU.

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Understandably, UK households are unsure what Brexit will mean for their finances. And while many people are making predictions, the truth is that nobody knows for sure what will happen.

We aren’t making any predictions – I’m writing this shortly after the results on Friday morning, and the long term picture is far from clear. Leaving the EU will take at least two years, so many rules won’t change for some time.

If you are seeking a degree of certainty about the size of your household bills and the future shape of your finances, here are some points to consider:

- Household budget. It’s always been important to keep a close eye on your income and outgoings to see how they stack up, and how much cash you have left over each month after paying your bills. Uncertainty over the economy makes this even more crucial, and when doing so make sure you take account of any big pieces spending you are planning – such as Christmas, home improvements or a new car. If other bills such mortgage rates or rental payments change, you’ll need to figure out how that affects the money you’ve got to spare each month.

- Your mortgage. As far as mortgage rates are concerned, any outcome is possible. Some experts are saying the cost will increase, others think a fall is more likely – and they might not change at all. It’s important to be aware that, if you’re on a fixed rate deal (these usually last 2 to 5 years), then nothing will happen to your monthly payment until the deal expires.

If you’re on a standard variable rate mortgage – which means your rate can be changed by the lender at any point – then whatever happens to interest rates as a whole will change your mortgage payment. If you are concerned about this, you could consider moving to a fixed rate mortgage deal. This will usually mean paying a fee upfront, but you’ll then know exactly what your monthly payment will be for a set period of time.

The same holds true for savings – rates could go up or down (or stay much as they are). If you want some certainty of what you’ll earn in interest, fixing your rate is one way forward. You can see the best rates for home loans and savings accounts in our Mortgages and Savings channels.

- Travelling abroad. As we said, nothing will happen right away in terms of our national status – your passport won’t suddenly stop working, and your European Health Insurance Card (EHIC) will still be valid.

On Friday morning, the value of the pound fell sharply against other major currencies such as the Euro and US dollar – in practice, this means when you are changing money to take cash on holiday, you’ll get less of it.

It’s impossible to say whether the pound will continue to fall, or get stronger. A lot of customers have been checking rates on our Travel Money comparison page. If you aren’t going away for a little while, it’s up to you whether you think now is the start of further falls (in which case consider buying now), or whether it’s a blip that will recover next week (in which case, consider waiting).

As far as travel insurance is concerned, it’s as important as ever to buy it when you book your holiday. If you’ve already got a policy for this year’s hols in the EU, it will continue to provide you with protection.

If you’re taking your car overseas, you should still check the requirements for the country you are visiting – here’s our guide.

Your UK car insurance will provide you with at least third party cover in Europe, but if you want comprehensive cover, check what your policy says about driving abroad. If it’s not provided automatically, ask your insurer to extend it (which may involve paying an extra premium). Same applies to breakdown cover.

Cutting your bills. Brexit or no Brexit, most UK households could save £100s on a wide range of household bills if they haven’t switched provider recently. Whether it’s gas and electricity tariffs, car and home insurance or broadband provider, if you’ve been with the same company for a while there’s a good chance you could get the same service for cheaper elsewhere.

For energy bills, wholesale prices (what energy providers pay to buy gas and electricity) have already been rising in recent weeks, so fixing the cost you pay for a set period is again a good way to get some stability in your finances.

If you aren’t sure what leaving the EU may mean for your pocket, freeing up as much disposable income as you can by cutting bills is an obvious step.

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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