Deciding to remortgage could have both advantages as well as disadvantages. Many experts are encouraging homeowners to consider a remortgage and to shop for one online to determine what opportunities are available. It is easy to shop online for a remortgage and get quotes to discover what savings or benefits are available. Once the homeowner reviews quotes, it is then easy to develop a strategy and determine if it is the right time to remortgage or not.

One reason a homeowner might decide to remortgage is to secure a more favorable interest rate. The Bank of England’s Monetary Policy Committee (MPC) has increased the standard base interest rate during each of the last twelve consecutive meetings. In December 2021, the first of the twelve meetings resulted in the historic low rate of 0.1% increasing to 0.25%. The last meeting resulted in the rate increasing to 4.5%. The base rate is now the highest it has been since 2008. 

There are thousands of homeowners with fixed rate terms expiring this year. Until their term ends, they will be paying at the same fixed rate and will not be subjected to rate increases. However, at the end of their term, their rate will end, and they will likely be facing more expensive interest rates and possibly numerous rate hikes ahead.

When a mortgage term ends, a homeowner could either remortgage or allow their lender to move them to their standard variable rate (SVR). Going onto a SVR is considered risky for those that would find it difficult to have their household budget impacted by quickly changing rates. A SVR is also usually connected to interest rate levels double or more the levels offered with remortgages. A remortgage not only could save money by being attached to a lower interest rate than a SVR, but by choosing a fixed rate deal the homeowner could avoid further rate hikes throughout the new term and save even more.

With a remortgage choice, a homeowner could also gain access to newer lending products. These deals might offer benefits that would be helpful to the homeowner such as being able to cash out built up equity with an equity cash release remortgage. The cash could be used for any need the homeowner chooses. In the last few years, some homeowners have used the cash from their equity release to improve and upgrade their home. Perhaps to make it more energy efficient and save money over the higher energy costs or make other improvements that could increase the value of the property or make the home more enjoyable for the family.

Other options for considering an equity cash release remortgage would be to use the funds for debt consolidation which might be extremely helpful as households continue dealing with inflation. 

There are also reasons not to remortgage, one of which is if doing so would incur fees negating any gains by securing a new deal. Homeowners do not always wait until the end of their term to remortgage. By taking on a penalty fee they can remortgage early. This would allow a homeowner to choose from current interest rates rather than waiting until their term would end which might result in higher rates. Homeowners could also choose to remortgage early to gain cash from their built-up equity. However, if there are high penalty fees it might be a better choice to wait to remortgage.

Another reason to wait to remortgage could be when the homeowner has a low ratio between their property value and debt. This is the loan to value ratio or LTV. In theory, the higher the value over the loan amount, the less risk there is for the lender to allow the homeowner to borrow. Lenders will therefore offer their best interest rate deals to homeowners with higher property values in relation to their borrowed debt. If a homeowner expects property values to increase soon, waiting for the value increase could help the homeowner’s LTV and bring about better interest rate offers from lenders.

Just as a homeowner might take on penalty fees to allow an early remortgage, choosing to await a soon approaching end of a term could be a smart choice if more savings would be likely by skipping any costs in ending the term early. Considering expert forecasts on future rate hikes during the remainder of a term could be helpful in deciding where the greater savings might be found in choosing to remortgage now or later.

It takes careful consideration of various factors when trying to decide to remortgage or not. The choice is often helped along by the expectations of future rate increases or decreases. Experts are warning there are more rate hikes expected this year as inflation remains stubborn. This means the interest rates of today would be no more, and borrowing would be more expensive. In fact, the peak interest rate forecast has increased to 5.5% in recent weeks, meaning the MPC could be voting for another rate hike as early as this month on 22 June.

Homeowners have many factors to consider in choosing to remortgage or not. Some of these factors are the remaining time on their current term, the forecasts of future changes in the Bank’s standard base rate as to increases or decreases, the ability to save money, release equity into cash, and to secure a fixed rate to shield the household budget from rate hikes. The considerations are unique to each homeowner, and if the choice is not clear and expert help is needed, homeowners should not hesitate to ask for help. 

To get started in the process of determining whether to remortgage or not, a homeowner could quickly gather quotes from a remortgage broker website or visit remortgage lender websites one by one to gather quotes. Comparing offers will help a homeowner learn what benefits and opportunities are available to them and then they can narrow down on the right decision as to whether it is smart to remortgage now or wait.