Last week the Bank of England increased the standard base interest rate by another 0.25% to carry the rate to a new high for the past 15 years at 5.25%. This has brought on more concern for homeowners coming to the end of their mortgage term or those that have already had theirs expire and have been moved to their lender’s standard variable rate (SVR) having forgone a remortgage choice. For those nearing the end of their term, those not on a fixed rate, and especially those on a SVR there are savings to be found with a remortgage.

The SVR of a lender is normally a higher interest rate than what could be found with a remortgage deal. In some cases, it could be double or more the offering of a remortgage, so choosing a remortgage would save money for the homeowner. It is why remortgaging has been in high demand since interest rates have been increasing. 

Homeowners that had two-year fixed rate deals coming to an end this year are leaving behind historically low interest rates for the highest interest rate offers in over a decade and a half. The increase in repayments could cause affordability issues for some homeowners. 

The advice of experts is for homeowners facing issues with keeping their repayments up to date to speak to their lender in search of help as soon as possible. Waiting until the problem is desperate is waiting too late. Rather than take chances, it is better to seek advice as soon as possible for help from the lender when help can be given and make a difference.

Those that can, should consider a remortgage. While the historic interest rates of two years ago are gone and rates are higher, there are savings to be found. Avoiding a SVR with a remortgage could save a substantial amount of money. Choosing a fixed rate remortgage could save a homeowner even more by shielding them from further rate hikes.

While inflation has been on a decline, and a better decline in recent months, it is not expected to reach the target rate of 2.0% until 2025. This forecast for inflation signals more rate hikes to come from the Bank of England’s Monetary Policy Committee (MPC).

The expectation of further rate hikes has motivated some homeowners to take on a penalty fee to end their mortgage term early to allow remortgaging at current rates rather than wait out the end of their term and face higher rates later. This strategy should come with much thought as to whether taking on a higher rate now would save money in the long run versus waiting out for the expiration of their term. 

In consideration of choosing the best remortgage offer, homeowners are encouraged to look at details of remortgage offers beyond the interest rate. Most borrowers focus simply on the interest rate, but the lowest interest rate could have the highest fees. By choosing a rate that is slightly higher, the deal could come with lower fees and even free incentives like free legal work to help with overall savings. Therefore, saving money could be found further by taking a close look at the savings of the whole deal and not just the lowest interest rate offered.

The most popular lending offer chosen by homeowners has been a five-year fixed rate remortgage. This reveals that homeowners are taking on the security of locking in a current rate rather than risking higher rates. They are finding confidence in their choice to shield their household budget more than the economy and forecasts of experts.

There is good news for those choosing to shop for a remortgage soon, as it is expected that this week lenders could begin to cut their own interest rate offers despite the MPC’s choice to raise the base rate last week. The slight dip in rates expected this week from lenders could help negate the MPC increase and help save money for some homeowners.

It is easy and a quick process to shop for a remortgage online. By simply visiting the website of a remortgage broker, a homeowner could get many quotes from a variety of remortgage lenders. Brokers could also offer a homeowner an exclusive deal from a lender not offered directly to borrowers. The homeowner could of course go from website to website of remortgage lenders to gather quotes to review and compare.

Repayments have increased for many homeowners, or they will face higher borrowing costs when their mortgage term is due to end this year or next. However, a remortgage could offer up several ways in which to save money rather than pay more than necessary.

The next meeting of the MPC is scheduled for 21 September and another rate hike could happen, so there is no time to wait for homeowners looking to shop for a remortgage offer that might save them money.