Bank of England Interest Rate Increase & What it Means for You
The recent increase in the Bank of England's Base Rate, from 4.25% to 4.5% in May 2023, has had a significant impact on individuals with finance loans. In this article, we will discuss the implications of this rate rise for dentists and their practices, as well as provide guidance on mitigating the effects and maximising savings.
One of the key implications of the rate increase is that monthly repayments for variable rate loans and overdrafts are likely to rise. This is because the interest paid on outstanding balances is determined by the bank's interest rate plus the Bank of England Base Rate. With the Base Rate increase, those with variable rate loans and credit cards will experience higher monthly payments. However, if you have a fixed-rate loan, your repayments will not be affected in the same manner as those with variable-rate products.
The extent of the impact will depend on the amount borrowed and the interest rate on the loan. If you have a substantial amount of debt, the increased repayments may strain your cash flow and make it challenging to keep up with payments.
What can you do?
Apart from fixing into a deal, there are other measures you can take to mitigate the effects of the rate increase on your finances:
1. Explore refinancing your loan with a specialist dental finance broker: This involves taking out a new loan with different terms, such as an extended repayment period or a lower interest rate. Consulting with a specialist dental finance broker can help you explore various options and find the best deal for your dental practice.
2. Regularly review your business loans: By conducting regular reviews of your business loans, you can ensure that you are receiving the most favourable terms. Assess the interest rates, fees, and early repayment charges associated with your loans. If you discover better options elsewhere, it may be advantageous to switch lenders.
While the Base Rate increase will impact dental practices, it's important to note that the demand for lending in the healthcare sector remains strong. There is still significant interest from lenders in this industry. However, due to the constantly changing market, it's crucial to continuously review existing lending arrangements to maximise cost savings for your practice.
In conclusion, although the Bank of England's Base Rate increase will have an impact on dental practices, there are steps you can take to minimise the effects. Regularly reviewing your business loans and seeking advice from a specialist broker are effective strategies to ensure your practice remains financially stable.
If you have any questions or require assistance from a specialist broker, feel free to reach out to Henry Schein Financial Services. As a specialist dental finance broker, we can help you refinance your loan and save money in the process. Our strong relationships with healthcare specialists at various banks enable us to offer you preferential rates, saving you both time and money. While each loan case is assessed on its own merits, we present your case to the banks in the most positive light to secure the best possible deal.
Want a review of your current business loan? Get in touch today.