According to studies, there are many homeowners that are unaware of remortgaging. Those that are familiar with remortgages often have misconceptions. Due to the many opportunities through remortgaging, experts encourage homeowners to take a look and learn all they can rather than miss out. This is especially so due to the current state of the economy, upcoming impacts to household budgets, and the benefits that could be realized with a new deal.

When a home buyer secures a mortgage it will have a particular interest rate attached and a specific term. The interest rate determines the cost of borrowing and the term is the length of time the deal will remain in place. At the end of the term the homeowner has the option to remortgage. If they do not remortgage, the lender will put them on their standard variable rate or SVR.

Often SVRs are attached to higher interest rates than what are available with remortgages. It means paying more than necessary to take on a higher interest rate. Also, the key word in SVR is variable. That means the interest rate can change. It can vary and it could vary quickly. When rates could increase, as is currently the case, it could be a shock on a household budget. 

In December the standard base interest rate set by the Bank of England was almost zero at 0.1%. At the Monetary Policy Committee (MPC) meeting in December, in response to rising inflation, the rate was increased from its historic low to 0.25%. The next MPC meeting was in February and the rate was increased again to 0.50%. There is an expectation that the rate will be changed again to at least 0.75% on 17 March during the next meeting.

Experts are forecasting that there could be many increases this year as well as next. Which makes it risky to be associated with a SVR. Quick increases one after another could be a financial burden, and even if not, increases in the interest rate means the loan is more expensive. To avoid paying more, a remortgage is the option.

A homeowner has many choices with remortgaging. They could borrow exactly the same debt amount as they owe, they could take out cash with the remortgage and increase the debt level, and there are very many options for the type of interest rate such as a tracker or fixed. Currently the most popular remortgage is a fixed rate remortgage. The fixed rate will stay the same throughout the term of the deal, meaning that it will stay the same despite the forecasted increases expected by the MPC.

By discovering a lower interest rate that is also a fixed interest rate, a homeowner could save money now and be a safety net for their financial health throughout the term when interest rates are increased.

Experts encourage homeowners to shop online with lenders or a remortgage broker to discover what remortgages are available. It is easy and quick to get quotes online. A broker will be working with many lenders and visiting their site can offer a quick comparison of deals available. It could also offer exclusive deals from lenders. 

A remortgage is an escape from the rising interest rates that are expected. Learning and getting acquainted with the benefits and opportunities in remortgaging could be a great strategy for getting through the economic times being forecasted ahead.