First time home buyers are often so elated at the point when they formally become homeowners, they don’t consider what is ahead of them. The stress is behind them, they no longer have to face rising rental costs, they have finally made it onto the property ladder and all is good. However, there remains as much of a need to create smart savings strategies and to stay aware financially as before when they were yet to own property. 

A smart savings strategy for homeowners is to consider paying more, even a slight amount more every month than required. Their repayment plus a bit more could save thousands of pounds overall and have them out of mortgage debt earlier. When paying more, the homeowner is paying down the principal or actual debt on the property versus interest. It will help adjust their loan to value (LTV) ratio and could bring them better interest rate offers as their loan total drops further below the value of their home.

Paying down more of the debt on a property also lessens the likelihood of dropping into negative equity should property values decline. Negative equity occurs when the homeowner’s debt is higher than the value of their home. In negative equity, the homeowner will be out of reach of a much needed remortgage when their mortgage term ends.

In a discussion of equity, it is important for new homeowners to understand how important equity is for them. The part of the property the homeowner actually owns is the equity. When first buying a home, many times the equity is gained with the homeowner’s deposit. For instance, they pay 10% of the cost of the home and they borrow 90% of the home. They will own 10% of the home. However, if the value of the home is higher than the purchase price, they will have equity above the 10% deposit amount.

Equity matters for the homeowner due to the lender’s viewpoint of offering further loans on the property. A remortgage is important when the homeowner’s current term ends. The lower the loan amount in relation to the value of the property is seen by a lender as less risk in lending. The better interest rate offers are then within reach of the homeowner when remortgaging.

Equity also matters when the homeowner desires to turn their built-up equity into cash. An equity cash release remortgage offers the ability to get cash into hand along with possibly a lower interest rate and / or a fixed rate deal. The higher the equity, the more cash available or the still attractive LTV while also pulling out cash from the property. The cash is often used by homeowners for upgrades and improvements to their property, which in turn could increase the value of the property. However, the cash rightfully belongs to the homeowner, and they can use it for any reason they desire from paying down debt to going on a once in a lifetime holiday.

Perhaps the most important tip for a homeowner moving ahead in their journey on the property ladder from their starter home to an upgrade to a downsizing purchase, is to understand all they can about remortgaging and make the most of the opportunity it brings.

Basically, a remortgage is starting over with a new loan. The homeowner will again have the choice to decide what type of a loan they want, how much they want to borrow, the interest rate they want, and the length of their term. This opportunity can happen because the homeowner has come to the end of their current mortgage term, because they have decided to end their term early and cash out equity, or because they believe there is an advantage to ending their term early to choose a deal such as would be the case if interest rates dropped to offer a substantial savings.

When a homeowner’s term ends and they decide to skip on a remortgage, their debt will be transitioned to the lender’s standard variable rate (SVR). Experts agree avoiding a SVR is the smartest way to save money. There are economic times when the SVR could be double or more the interest rate level of what could be found with a remortgage. 

Since a remortgage could offer more savings and avoiding a SVR is the smarter strategy, homeowners should consider when there is an opportunity to take advantage of and luckily shopping for a remortgage is quick and simple.

Going online to shop for a remortgage is possible at any time and takes only minutes to gather quotes from a variety of lenders when shopping with a remortgage broker. Brokers also could offer exclusive deals not available from lenders directly to borrowers. Homeowners could also visit lender websites one after another to gather quotes to review and compare.

There is no denying the opportunities what remortgaging can offer and the choices for why to remortgage could be influenced by the unique needs of the homeowner or the economic situation at the time. A few minutes online is an easy and quick way to discover those opportunities and take advantage of them time and time again when one becomes a homeowner.