It is estimated by experts that there are literally millions of homeowners that have ended their mortgage deal and have moved over to their lender’s variable rate.  It is even estimated further that a small percentage of these same homeowners are aware that a remortgage could be beneficial to them financially.  After all, few of them truly realize what an increase in the standard base interest rate will cost them as far as higher monthly mortgage payments.  It is also surprising that many are unaware of the risk they are in staying on their lender’s variable rate.

When homeowners ended their mortgage deal and moved to their lender’s variable rate they were probably unaware how risky it is to sit on this rate forever.  Since they probably have a very low interest rate it looks like a smart situation to remain on this type of mortgage until the interest rates begin to rise.  However, a lender’s variable rate is not tied to the Bank of England’s Monetary Policy Committee’s (MPC) actions and changing the interest rate on a lender’s variable rate is at the discretion of the lender.  They can change it when they want, how often they want, and at a level of change that they want.  This is in fact a very risky mortgage for any homeowner to be in unless they can handle quick and unexpected fluctuations in their mortgage payments, including increases.

Homeowners may not have considered that the deals that are available in remortgages presently will disappear once the MPC does change their interest rate level.  Once the MPC base rate increases so will the rate levels that are offered on remortgages by lenders currently.  So the smart move of a homeowner is to secure a remortgage at a low rate before the MPC hikes the interest rate level.  This is where it is tricky to know just when that will happen and so therefore one can only pay attention to forecasts given by economists.  Even then, things can occur that can impact the MPC’s consideration and they may either mirror forecasts or go completely against them, but the majority of the time they are spot on. 

Experts suggest that homeowners become aware of their current mortgages and educate themselves as to the type of mortgage they have.  They then should consider if they could handle a rate increase with their current household budget and how much.  If a rate increase would cause a difficulty they should consider a remortgage and seek advice from a remortgage broker or expert to see what would be the best situation for their needs.