For homeowners, there might be confusion as to why there is so much talk about remortgaging. The confusion could be due to misunderstandings about what a remortgage is and what it can do. During specific economic situations, a remortgage could save a homeowner money when there are lower interest rates to be found. When the homeowner is coming to the expiration of their current mortgage term, a remortgage could offer the ability to secure a lower interest rate, a longer term, or even a fixed rate to lock in a rate and offer peace of mind.

What a remortgage doesn’t do is add more debt to a homeowner when they simply are at the end of their mortgage term. In fact, by remortgaging, the homeowner could actually diminish their cost of borrowing by choosing a lower rate. There are some homeowners that do decide to borrow more with their remortgage. The reasons are varied but it could be to invest in upgrades or improvements for their property, which could in turn, increase the property’s value, and perhaps save money through energy improvements or other options.

The cost of a remortgage could involve a fee for ending a term early, but the fee for those that choose this option is seen as necessary to save overall. Many homeowners will choose to remortgage and take on a penalty cost for leaving their current deal before its expiration. In this situation, it might be to take advantage of lower interest rates available or possibly to lock in a current interest rate for a longer term if they feel rates will rise steeply in the coming months when their term will have ended.

Another remortgage opportunity is to cash out the homeowner’s built-up equity. An equity cash release remortgage allows a homeowner to have cash in hand for what they need or wish to spend it on and has allowed homeowners to handle emergency situations, build lifetime memories on holidays, to assist family members into their own homes, and to invest back into the home to build value in the property.

Remortgages and the choices for them are as unique as each homeowner. The common reason is to save money. A homeowner will basically be choosing a new loan just as they did when they first bought their property. The main difference is there is no need to shop for the home or to spend restless nights wondering if they will someday be waking up in their home once they complete the purchase. The stress of first-time buyers is skipped for the homeowner has their home, they are simply choosing a new loan when they remortgage.

Most remortgaging occurs at the end of a homeowner’s current term. Their term ends and is no more. They have a choice to either remortgage to new choices or allow their lender to transition them to their standard variable rate (SVR). Avoiding a SVR is the strategy encouraged by experts because the rate of a SVR is generally higher. In fact, it could be double or more the rate found with a remortgage which could offer substantial savings over the life of the new deal.

The most popular remortgages currently are fixed rate deals. This might come as a surprise to many, especially those that are mistakenly hoping the interest rates available during the pandemic were normal and will return. The under 3% and even near 1% interest rate deals were unique to the economic environment and waiting for those to return would be like waiting for a submarine at a bus stop. It is not going to happen, at least as long as economic recovery is in process.

There are higher interest rates than what were available in 2020, 2021, and even 2022, but the rates are still lower than what could be considered normal. The ability to lock in current rates is why fixed rates with longer terms are becoming more popular with homeowners. Still, even fixed rate deals of two, three and five years are highly chosen.

For anyone researching current interest rates, it will quickly become obvious lenders have already begun dropping their rates prior to the Bank of England’s Monetary Policy Committee (MPC) meeting to cut the standard base interest rate. The forecast is strong for the 5.25% rate to be cut at the next meeting on 1 August, but lenders aren’t waiting and have already made cuts to their offerings as if the MPC voted yesterday.

Rather than wait for the MPC, lenders are optimistic, seeking to gain the attention of borrowers and offering lower rates before the base rate is cut. The savings over the rates available only weeks ago is why homeowners are choosing to remortgage and do so while locking in their chosen interest rate for the duration of their term.

For homeowners wondering what offers are available to them, what savings could be found, what terms are offered, and other opportunities in remortgaging, it is easy to find out by simply shopping for a remortgage deal online. A few minutes spent at the website of a remortgage broker could put numerous remortgage quotes from a variety of lenders in front of a homeowner. Then it is simply a matter of reviewing and comparing the quotes to find the best remortgage deal. The option is also there to go from website to website of remortgage lenders to gather quotes.

Understanding the benefits and opportunities of remortgages is important so that homeowners do not miss out on the savings and money that should stay in their household budget rather than be spent unnecessarily.