Homeowners have shared in surveys that many are confused about remortgaging, the benefits, and for some exactly what a remortgage actually could do to help, especially in economic times when interest rates are on the rise. Increasing interest rates are exactly the forecast throughout the year and into next by experts. Therefore homeowners are encouraged to learn all they can about remortgages and strategize to save money rather than pay more than necessary.

Remortgaging is a choice by homeowners at the end of their mortgage term. If they do not remortgage at the end of their term, they are moved to their lender’s standard variable rate (SVR). The SVR could be risky as it fluctuates due to the lender’s response to the Bank of England or economic stresses. The borrower is then subjected to possible quick increases or decreases to their repayments. At times when interest rates are on a downward movement the SVR rates could offer quick relief, but when interest rates are on the rise it could cause financial strain on a household budget.

Reports have shown the average SVR could be more than double the interest rate level of a remortgage. By choosing a remortgage, a homeowner could save money and lower the risk of facing quick changes of a SVR.

Homeowners could find more security in choosing a fixed rate interest rate remortgage. By choosing a fixed rate, the homeowner locks in the interest rate for the length of the term. This offers savings against rising rates. This is why fixed rate remortgages are in high demand from homeowners when interest rates are increasing as they have been during the last few months.

Another aspect of remortgaging is the opportunity to borrow more against the property loan. The money could be used to invest in the property for upgrades or improvements. Increasing the value of a loan is a choice of the homeowner and not a requirement of the remortgage. Many homeowners borrow the exact amount of their loan and do not increase the level of the debt. Yet, there is the opportunity to borrow more for investments in the property while also choosing a lower interest rate to save money.

Homeowners could also remortgage and discover a lower interest rate while releasing the built up equity they own in the property. Equity is the part of the property value that is the above the level of the loan. Equity grows as a loan is being paid off and it can grow when the value of a property increases. During the pandemic, property values grew rapidly as demand for property increased. Many homeowners saw unprecedented increases in their property values. The increase in equity allows a homeowner to consider a remortgage that allows them to cash out their equity and use the money for whatever they wish. The funds could be used to build an emergency fund, to pay for a holiday abroad, or to improve or upgrade the home. It is the homeowner’s choice.

There are as many remortgage choices for homeowners. Not every homeowner needs the same remortgage, so lenders offer a variety of choices. Despite the variety, the main focus is to make financial strategies for the homeowner’s needs. It could be to save money with a lower interest rate, to secure a fixed rate to avoid interest rate hikes, to release equity into cash, to borrow more money to upgrade the property or a combination of options. 

It is easy to discover what options and savings are available to a homeowner by shopping for a remortgage online. Remortgage brokers offer many quotes from a variety of lenders and often have exclusive deals, or a homeowner could always go from website to website of lenders to obtain quotes. Once the homeowner has quotes they can compare and discover what opportunities and savings are available.

Overall, learning about remortgaging could start with discovering what opportunities are available online through quotes. Any questions could easily be answered by experts or researched online as many lenders and brokers offer educational information online.

Experts are encouraging remortgaging due to rising interest rates and inflation. Doing so could offer a safety net for a homeowner’s financial budget. Building that safety net could start now and with a few minutes shopping online.