House prices are declining and along with the purchasing price of properties, the value of properties owned could fall. For many homeowners, there is little concern about the value of their property as it rises and falls during economic times. However, there is a reason to be concerned. When homeowners come to the end of their mortgage term and seek out a remortgage, the value of their property matters. It can make a difference as to whether they can or cannot remortgage, and it will come into play as to what remortgage offers they will qualify for and that could bring about a lower or higher interest rate for the homeowner.

At the end of a mortgage term, the homeowner can choose a remortgage, or they can allow the lender to move them to the lender’s standard variable rate or SVR. The SVR tends to be a higher and therefore more expensive interest rate. By avoiding a SVR and choosing a remortgage a homeowner could save money. If rates are increasing, a remortgage could offer a fixed rate and save the homeowner more money by shielding them against higher rates that a SVR would not.

When applying for a remortgage a lender will take into consideration the loan amount and the property value. Lenders refer to this as the loan to value amount or LTV.

Unfortunately, some homeowners could decline into negative equity. This happens when the homeowner’s property value declines below the amount of debt on the property. It is a real possibility for those that have not been paying on their mortgage for very long, such as new homeowners.

New homeowners are perhaps the most in need of a remortgage at the end of their mortgage term, especially those that secured their mortgage when the Bank of England’s standard base interest rate was at an all-time historic low. 

Many homeowners will be coming to the end of their mortgage term in the final months of 2023 and in 2024. Those with fixed rate deals will have secured interest rates much cheaper than those currently available. Moving to a SVR would have the homeowner paying more than necessary. Therefore, a remortgage is highly recommended by experts.

The first step for a homeowner is to get reacquainted with one’s current mortgage. The first bit of information that is important is when the term will expire. Also important is what type of loan the homeowner chose and the interest rate. With that information in mind, the homeowner is prepared to begin shopping for a remortgage.

Remortgage shopping is easy and quick to do online. A homeowner can visit the website of a remortgage broker and in a matter of minutes have remortgage quotes in hand from a variety of lenders to review and compare. Brokers could also have exclusive deals from lenders not offered directly to borrowers. Homeowners also have the option to go from remortgage lender website to another to gather quotes online.

By choosing a remortgage over a SVR the homeowner could save money, and by choosing a fixed rate deal the homeowner could avoid paying higher interest rates should the rates be increased during the new term. The amount of savings overall could be substantial.

As discussed, the property value could determine if a homeowner could remortgage or not, and for what remortgages the homeowner could qualify for in terms of interest rates offered to the homeowner. 

There is little the homeowner could do about declining property values due to economic stresses. As interest rates have increased, demand in the housing market has decreased and property values could as well. However, property values are also impacted by upgrades and improvements. For instance, increasing energy efficiency could help the homeowner increase their property value in some instances as well as save them money by cutting energy costs.

To help fund improvements and upgrades, many homeowners use their remortgages to do so. An equity cash release remortgage could put money into the homeowner’s hands for any expense they wish to use it on, but for those that turn around and invest back into the property they could be building a buffer against going into negative equity by building the property’s value.

In a recent survey of homeowners, it was revealed that the decline in average house prices was of little concern to them. The research from eXp UK, a personal estate agent platform, from 1,094 homeowners polled revealed that getting into a home was the most important concern as it helped them avoid the rental market and landlords. Only 27% of those polled in the research responded they had concern over the decline of demand in the housing market.

There is the history in recent years of the housing market turning out to be quite resilient. Not only during Brexit, but also during the global pandemic and due to the pandemic, the housing market boomed. 

For those not willing to take a financial risk when savings are on the line, following the advice of experts and getting reacquainted with one’s current mortgage and then shopping online for remortgage quotes is the right start.