Higher rates: How well will you cope?

The more 'yes' answers you give, the worse your chances of coping when borrowing costs rise.

Do you have a variable rate loan?

Fixed rates are not always as cheap as variable deals with discounts, but they provide certainty if your finances are stretched.

Did you push your budget to the limit to afford your property, perhaps borrowing the deposit as well?

In the past, hefty salary rises would have reduced your mortgage burden within a year or two of you taking it out. But unless you're a whizz kid, your salary will have done little more than keep pace with inflation. Prepare to tighten your belt.

Do you think budgeting is for bores?

One positive aspect of the struggle many first-time buyers have, to get on the property ladder, is that it forces them to start balancing their own books. If you managed to buy without a budget, you're probably rich enough not to worry.

Are you locked into a variable rate deal that automatically raises payments once the special rate has expired?

Lenders do not offer these deals as freely as they once did because there was an outcry from unhappy borrowers. But they are still available; responsible lenders will make sure you know what you can expect once the special deal expires. Make sure you listen.

Do you have several debts as well as a mortgage?

No explanation needed here; more is not merrier with multiple debts.

Have you borrowed to pay off other debt?

Not necessarily a bad idea if you have cut monthly outgoings and have resisted any temptation to continue borrowing.

Is your loan large in relation to the value of your property?

You're at risk of negative equity if the housing market collapses. This does not mean you will have trouble with repayments, but it will be hard to sell your way out of trouble.

Do you have a second mortgage?

Again, not a problem necessarily, but an indicator that you could be overstretched and underinformed about the cost of credit. Ray Boulger, of mortgage broker John Charcol, believes that many people take out expensive second mortgages to raise funds when they could probably borrow from their existing lender.

The rate on a second mortgage may be lower than on a credit card, but it may not be as low as if you borrowed from a mainstream lender. When you take out a second mortgage, you increase the risk of losing your home if you cannot keep up the payments.

Do you think shopping around for loans and credit cards is a waste of time?

At present it is possible to switch debts from an existing credit card to a new one and pay no interest for several months on the debt you transfer. The trick then is to move on to another zero-rate or low-rate deal when this one expires.

If you have a traditional variable-rate mortgage, you are almost certainly paying more than you need. There are many deals available at less than 5 per cent, without onerous extended redemption penalties.