Due to the possible higher repayment costs when a homeowner’s mortgage term ends, experts are encouraging all homeowners to consider shopping for a remortgage. Many are coming to the end of their term and will be losing the low fixed interest rate they secured when lenders were offering historically low mortgage rates. Due to the pandemic, the Bank of England’s Monetary Policy Committee (MPC) lowered the standard base interest rate to an all-time over 300 year low of 0.1%. With that low base rate, came offers from lenders that were in themselves also historic lows and borrowing became cheaper than could have been imagined only years prior.

The Bank’s base rate is no longer sitting close to zero. In December 2021, the first of eleven consecutive meetings of the MPC started the rate climb to the current level of 4.25%. 

Lenders are no longer offering the historic low rates that many homeowners have been paying on, and according to recent reports homeowners could face paying £340 more per month with current offers. 

While new rates will not be as low and cheap as they had been, homeowners could still save money and prevent paying more than necessary. 

When a homeowner’s term ends, they can remortgage or they will be moved to their lender’s standard variable rate (SVR). Allowing that could cause financial strains for a homeowner due to a SVR usually being associated with higher interest rates which could be double or more the rate found with a remortgage. 

A remortgage could not only save money by offering a lower interest rate than offered with a SVR, but with a remortgage, a homeowner could secure a fixed interest rate and protect their financial budget from further rate hikes of which there could be more. Inflation was reported in March as still in double digits and will require more from the MPC to reach the Bank’s target of 2.0%. According to experts, another rate hike could come before summer.

There will not be a meeting of the MPC in April, and the next will be in May. This leaves plenty of time for homeowners to take the advice of experts and ward off a risky SVR and shop for a remortgage to save money.

It’s easy to shop online for a remortgage. Visiting the website of a remortgage lender could put a quote in hand offering information as to what savings could be found for a homeowner. Getting more quotes to compare is as simple as visiting more lender websites or it is even easier by shopping on a remortgage broker website. Brokers work with many lenders and the homeowner could get many quotes from a variety of lenders and possibly even exclusive deals not offered directly from lenders to borrowers.

Quotes will offer information as to what offers are available. Then a strategy could be created for a homeowner to make the most of the current economic situation and lending offers. Some homeowners will wait until their term is set to end before choosing to remortgage, others might take on a penalty fee to end their term early to allow remortgaging before their term was due to end. Doing so would allow remortgaging at current rates rather than waiting until the term ends and facing possibly higher rates.

Homeowners should take action and be aware of when their mortgage term is due to end and shop online for remortgage quotes. Not doing so could cause the homeowner to be caught in a situation where they are rushing to remortgage rather than having the ability to shop and find the best remortgage deal available. It could also cause the homeowner to end up on a SVR while shopping for a remortgage and take unnecessary money away from the homeowner’s budget.

The lending market looks quite different to what it did a few years ago, in fact the current Bank rate is the highest it has been in over a decade. It will cost more money to borrow or in repayments as interest rates increase, but homeowners could soften the blow to their budget by shopping for a remortgage in the hope to save money when doing so could make a big difference.