Experts have been spreading the word for many months now of the benefits available to homeowners should they choose to remortgage. This is especially true for those that choose a fixed rate remortgage. Doing so locks in the interest rate and shields the homeowner from further interest rate hikes. It also protects homeowners from the riskier and often more costly standard variable rate (SVR) they will face at the end of their mortgage term if they skip a remortgage.

Homeowners that come to the end of their mortgage term can choose to remortgage or their lender will move them to their SVR. A SVR is subject to increases or decreases according to the economic environment, global lending issues, and the decisions of the lender. An SVR is also often higher than the rates offered with a remortgage, so skipping out on the opportunity to remortgage could have a homeowner paying more than necessary.

Prior to the global pandemic, interest rates were affordable as they had fallen during economic issues such as Brexit. However, as the pandemic set in and lockdowns began, interest rates plummeted. The Bank of England’s Monetary Policy Committee (MPC) lowered the interest rate to an all time historic low, which is a 300 plus year historical low, of 0.1%. It is the closest to zero the rate has ever dropped.

Many homeowners therefore have purchased a home or obtained a remortgage during the time in which the Bank’s rate was historically low. During that time, lenders also offered their all-time low interest rate offers. This lending environment made borrowing cheap and buying a home more affordable. 

Those same homeowners could now be nearing the end of their term, and as previously mentioned they will choose to either go onto their lender’s risky SVR or choose to remortgage. By remortgaging, they may not have available the lowest interest rates as before, but certainly could have the option to choose from rates lower than the SVR. This will offer savings. Even more savings could be found should they choose a fixed rate remortgage and lock in their interest rate. The fixed rate will offer relief from facing any further rate hikes by the MPC, which are expected as soon as the next meeting.

There are of course more opportunities with a remortgage than just savings. The homeowners that have built up equity into their home, which is the part of the value of the home the owner has acquired free of debt, could turn their equity into cash.

An equity cash release remortgage could not only offer savings for a homeowner, but also put cash into hand for any expenses they desire. Some homeowners that have chosen an equity release remortgage have used the funds to upgrade and improve their home which in turn could add value back into the home and boost the equity further. A popular choice recently for the equity funds has been to upgrade the energy efficiency of the home due to higher energy costs. This too, is how a remortgage could lead to saving money.

There are further rate hikes ahead for the MPC and costs will rise for borrowers as inflation continues to be an issue. It is forecasted for the base rate to rise from the current 3.5% to possibly 4.5%. If this is so, then there are further rate increases ahead. By remortgaging, sooner rather than later, a homeowner could be gifting themselves a way in which to recover and realize savings in many ways.

It is easy to discover if a remortgage could be helpful. Shopping online with a remortgage broker could put numerous quotes in hand from a variety of lenders and the homeowners could then review and compare to determine the best remortgage offer. Also, brokers often have exclusive deals from lenders that are not offered directly to customers. There is always the option of a homeowner shopping website to website of remortgage lenders to gather quotes to compare. 

Remortgaging could offer savings, which could definitely be helpful to a household budget these days, but there are more opportunities than just savings. One could cash out their equity, obtain a longer term to weather against future rate hikes, or escape a risky SVR. The benefits of remortgaging are as varied and unique as there are varied and unique needs of homeowners. 

The next meeting of the MPC is in February and rather than face another rate hike and miss out on the opportunities of current rates, a homeowner should consider shopping for a remortgage a must do and think of it as a last minute holiday gift to make next year a bit jollier or a perfect start to an expected difficult economic year ahead.