Warnings of a slowdown to the UK housing market could make for a double hit financially to household budgets. Not only are homeowners facing higher interest rates, but they could also see a loss in property values. Losing value in one’s home could cause the homeowner to dip into negative equity in the worse scenario, and if not in negative equity it could still result in the homeowner not being able to qualify for the best remortgage offers which otherwise could have offered substantial savings.

One of the criteria used by lenders to determine which remortgages are available to a homeowner is the loan to value or LTV. At a certain level of LTV, a remortgage is available, such as an 80% LTV which means the loan is 80% of the value of the property. Usually, the lower the LTV, the better the interest rate offered since the lender is taking on less risk in lending to the borrower. If property values decline, a homeowner could in theory move out of perhaps the best remortgage interest rate offers into higher  more costly rates. Even a slight percentage rate difference on a high value loan could cost the homeowner thousands of pounds more than if they had qualified for the lower rate.

Homeowners will not be able to remortgage if their property value falls below the debt level of the home. The homeowner would normally be required to pay enough to bring the debt below the property value. Also, there would be the need to fall within the offered LTV remortgage offers to qualify. 

Without the ability to qualify for a remortgage when a mortgage term ends, the homeowner is put on the lender’s standard variable rate or SVR. A SVR could be double or more the interest rate possibly found with a remortgage. Paying more than necessary is not likely the desired financial strategy of any homeowner, so a remortgage opportunity is important.

There is not much a homeowner can do about the state of the UK housing market, but it does help to keep a watch and understand how the market is impacting current property values in their area. The ability to go online and investigate property values around one’s home is easy. Websites that list properties for sale often offer estimates of a home value for a particular area, others will offer an estimate of a particular home. Of course, these online values are estimates and cannot determine true value as the sites do not have access to current improvement information or upgrades that may have added value to the property.

The estimate could however be helpful to a homeowner that is trying to understand more about why they are offered some remortgages and not others. It could be simply due to the LTV, though there could be other factors causing concern to the lender as well.

Another consideration to keep in mind for homeowners concerns loyalty to a lender.

Homeowners should understand that in shopping for a remortgage it is likely best to throw loyalty to a lender out the window so to speak. Getting the best remortgage deal should not be hampered simply because the homeowner has a loyalty to one lender over another. With interest rates much higher than this time last year, and more increases to come, the homeowner should put the best opportunity for the household budget ahead of loyalty to a specific lender.

It is easy to determine what remortgage offers could be available by shopping for one online. It is quick and easy to get quotes in hand to review by going to a lender’s website. Getting numerous quotes from a variety of lenders could be had by visiting the website of a remortgage broker. The broker could also have exclusive deals that would make the quick time online well spent.

The Bank of England’s Monetary Policy Committee (MPC) will be meeting the first week of November having not met during the month of October. On 31 October, the UK government will be reporting about the state of the economy and the MPC will take action only days later in response. Homeowners are warned that it could result in a larger interest rate hike than seen this year at any of the previous meetings.

A remortgage, especially a fixed rate remortgage, could be helpful to a homeowner. They could lock in a current interest rate rather than face higher interest rates later. It is so appealing that some homeowners are taking on penalty fees to end their mortgage term early to allow remortgaging now rather than face higher rates when their mortgage term was due to end.

There are a lot of factors that are all possible of causing financial hardship in the months ahead, for homeowners, a remortgage could be helpful and is certainly worth discovering how helpful by shopping for a few minutes online. It could make all the difference and offer peace of mind.