As UK house price indices continue to be released, the data confirms that the housing market is doing quite well. Home buyers are hopeful in the current supply of available properties and in the opportunity to obtain a low interest rate mortgage. In addition to more choices in possible homes and cheaper borrowing rates, asking prices, while still elevated from the buying frenzy of the pandemic, seem to be reasonable with buyers. They have increased, but not to the point of shutting out many buyers or having them disengage from the market all together. 

A strong housing market is good overall for the economy, and of course buyers, sellers, and all those businesses, especially small businesses, which are connected to the industry of buying, selling, moving, and improving properties. However, it is also good for homeowners. 

Already having obtained a mortgage and discovered their perfect property, you would think there is little that would be of interest in the housing market to a homeowner, but it really should be something they watch and take notice of when it comes time to remortgage.

When a homeowner comes to the end of their current mortgage term, there is the choice to remortgage or to be transitioned to the lender’s standard variable rate (SVR). Experts encourage homeowners to avoid the risky SVR scenario. The key reason being the variable aspect of the loan which could mean quickly changing interest rates that rise and take more out of the homeowner’s budget with little notice and having to pay more than necessary and rush to remortgage. A SVR could be double or more the interest rate level of a remortgage offer and since it is a variable type of loan, the option to get the fixed rate safeguard option is out.

Since most homeowners have the option to choose a remortgage up to six months before their term ends without any fees for ending the deal early, there is no reason to wait until the last minute to shop for a new deal. Also, a homeowner could choose a remortgage and wait out their choice until it gets closer to assure they have chosen the best remortgage deal for their needs.

Unfortunately, many homeowners are either misinformed about remortgages or simply unaware of the benefits. There is commonly a fear of remortgaging and drastically increasing the cost of the mortgage debt. A homeowner does not have to remortgage for more money than they currently owe, but some do. It allows them to get their hands on money for investing back into the property.

There are also remortgages that allow a homeowner to cash out their built-up equity and that cash could be used for any need such as consolidating debt, upgrading a heating or cooling system to save money overall, or even for a much needed family holiday. The choice is totally up to the homeowner as to how to spend the money.

Equity matters when someone is wanting to cash it out with a remortgage, however, it also matters in helping a homeowner be offered better interest rate deals. The same situation that occurred with the very first mortgage is a part of the remortgaging process, in that how much a homeowner is borrowing in relation to the loan amount. Lenders refer to it as loan to value or LTV, and it helps them assess risk in lending. The higher the value of the property against the loan amount is used by lenders to determine risk.

When a home buyer offers up a deposit, that is taking the amount needed in the loan to a lower amount, so the LTV ratio is considered in determining mortgage interest rate offers. Higher deposits could result in better mortgage deals. One will see when lenders offer deals the lower the LTV ratio the better the interest rates associated with those loans. 

Homeowners could see the value of their property increase through many different ways, such as paying down debt over time, or making improvements and upgrades to the property. Perhaps the one most common is the property value increasing simply due to buyer demand. During the buying spree during the pandemic in the race for space, homeowners could watch their property values grow substantially in a matter of days.

The market is robust and is expected to show strong growth for the year. Next year might be a bit subdued if asking prices continue on the rise, but growth should remain a part of the market through 2025. This offers opportunities for homeowners seeking remortgages to perhaps get better deal offers than they expected, which is why it is good to push loyalty for one’s current lender aside and shop for remortgage quotes.

Shopping for a remortgage is easy to do online, and not only is it simple but fast as well, especially when shopping online with a remortgage broker. Brokers not only could have exclusive deals from lenders not offered directly to borrowers, but by visiting just one broker online, the homeowner could have numerous quotes from a variety of lenders. There is always the choice of going from website to website of lenders to obtain quotes. With quotes in hand, it is just a matter of choosing the best option for the homeowner’s needs.

A remortgage is a smart tool to use throughout the journey of homeownership. It could provide a way to save money and in uncertain economic times provide peace of mind by locking in a low interest rate to be shielded from rising rates.

With unexpectedly low interest rate deals on the market now, it is smart to shop for quotes online no matter where a homeowner is in their current mortgage term. It could be needed as the days on the calendar click down to the expiration date only months or weeks away, it could be to create a financial strategy for next year, or it could be to quickly move off a risky SVR and stop paying too much and save money. There is even the opportunity to simply see what could be ahead should rates rise or fall in the years forward. 

Shopping for a remortgage is a smart strategy for all homeowners no matter where they are in their current mortgage deal, especially now as the housing market is thriving, and interest rates on new deals are so incredibly attractive.