Homeowners coming to the end of their mortgage term this year are encouraged to shop for a remortgage as soon as possible. Doing so will allow them to prepare to face higher interest rates and grab a deal that allows them to better afford their repayments, choose a low interest rate, possibly cash out built up equity to put money into hand, and choose a fixed deal to lock in their new rate. While there are many homeowners coming to the end of their mortgage term, even homeowners not nearing the end could benefit from a remortgage.

The two-year mark has come for those that only a few years ago chose their interest rate with a remortgage or mortgage from offers that were at historic lows from some lenders.

The Bank of England’s Monetary Policy Committee (MPC) had lowered the standard base interest rate in response to the global pandemic’s impact on the economy to only 0.1%. The housing market flourished with cheap borrowing. Yet, in little over a year ago, interest rates have risen to the highest level in over a decade, putting homeowners that chose a two-year fixed interest rate in jeopardy of facing affordability issues.

Homeowners coming to the end of their mortgage term will no longer benefit from their historically low interest rate. Their low rate will end, and they will be given the choice to remortgage or to allow their lender to move them to their standard variable rate (SVR).

Being moved to a SVR is considered risky for those with budgets that would suffer with an interest rate that could be increased suddenly. 

The MPC is expected to have further rate hikes and could possibly increase from the current 4.5% to 5.0% by the end of the summer. If in following the trend of the MPC recently, this could mean there are at least two more rate hikes of 0.25% to increase the rate another 0.50%.

Of course, further rate hikes will be dependent on how inflation performs. Only weeks ago, it was thought the rate hike of 4.25% had reached its peak and there would be no further hikes needed. Inflation remained in double digits at 10.1%, which is more than five times the Bank’s target rate of 2.0%. This is why during the May meeting of the MPC they raised the rate for the twelfth consecutive time since December 2021.

To try and save money, experts encourage homeowners to shop for a remortgage if they have already come to the end of their mortgage term and are currently on a SVR. Those nearing the expiration of their term should also consider shopping for a remortgage as soon as possible to secure a remortgage rather than allow their lender to move them to a SVR.

A SVR could have a rate double or more those found with remortgages.  Not only could money be saved by choosing a remortgage, but a fixed rate deal will lock in the rate and protect from any further rate hikes.

It estimated that there are over a million homeowners that could benefit from a remortgage. It is easy to discover what opportunities are available by shopping online. Visiting the website of a remortgage broker or lender could put quotes in hand to review and compare in a matter of minutes.

Homeowners that put off shopping for a remortgage could face hundreds of pounds more per month in their repayments. Rather than pay more, homeowners could simply take the advice of experts and shop for a remortgage.