There has been much in the news concerning homeowners and the importance of remortgaging. There are many reasons for this, the most obvious being higher interest rates. Years ago, a rate of 4.5% would have been considered normal and affordable, but it is less the case when homeowners coming to the end of their mortgage term are leaving behind historically low interest rates and having to face the rates offered currently.

A little over two years ago the rates offered by lenders were at historic lows for their lending institutions, due largely to the Bank of England’s Monetary Policy Committee (MPC) pushing the standard base interest rate to an all-time over 300 years historic low of almost zero at 0.1%. With borrowing so cheap, many took advantage of the ability to borrow despite the lack of confidence in the economy due to the global pandemic. Millions borrowed to purchase homes or secure a low interest rate with a remortgage. Now, two years on and those rate choices have disappeared, and homeowners will be facing rates double or more the rate they were used to paying. For many, affordability will be an issue, especially for those that skip the need to  prepare and take on a strategy to save money with a remortgage.

When a mortgage term ends, the homeowner can choose to remortgage or allow the lender to move them to their standard variable rate (SVR). A remortgage normally has the lower interest rate offers, with a SVR being the more expensive choice. With a remortgage, the homeowner could also choose a fixed rate offer rather than deal with the consequences of a variable rate with the SVR. Locking in a rate with a fixed rate choice is encouraged when the MPC could be increasing rates, and there are many experts that believe more rate hikes will occur.

The MPC has increased the base rate twelve consecutive meetings since December 2021. The last meeting in May resulted in the rate being increased by 0.25% to 4.5%. The next meeting is scheduled for 22 June and another rate hike is possible due to the continued high level of inflation which is now at 8.7%. It had been thought that inflation would drop from double digits at its previous 10.1% farther than near 9%, and due to that the expectation is for the peak base rate to reach 5.5% before there is an important reset to inflation to bring it closer to target of 2.0%.

Remortgaging offers homeowners the opportunity to take advantage of potential financial benefits to escape current economic circumstances when they are unfavorable. Inflation has been taking a toll on household budgets, as well as higher energy costs, the lingering impacts of the pandemic, and of course, higher interest rates. Relief from these financial stresses would certainly be important and a remortgage could provide the help needed.

Remortgaging could help homeowners to reduce their monthly mortgage payments, thereby providing financial relief. An equity cash release remortgage could put funds into the hands of the homeowner to help them in whatever way they need such as debt consolidation, paying down a high interest rate credit card, or to pay for upgrades and improvements to the home such as making the home more energy-efficient to save money. Of course, the equity release money could be used for other personal reasons as well.

Homeowners could seek simply to remortgage to take on the lowest rate possible and lock it in with a fixed rate choice to shield against the expected higher interest rates to come.

It should be noted that when homeowners secure a fixed rate versus a SVR they are most likely going to save money, and it could be a substantial amount of money. Savings are also possible by avoiding further rate hikes with a fixed rate deal. Other opportunities in remortgaging could align with a homeowner’s financial goals as well. For instance, homeowners who have improved their creditworthiness or through increased property values created a better loan to value or LTV could find they have access to better rates than they previously did. To discover what remortgage offers are available, a homeowner could simply begin by shopping for remortgage quotes online.

Visiting the website of a remortgage broker could provide many quotes from a variety of lenders. Also, brokers often have exclusive deals not offered from lenders directly to borrowers. Homeowners could also visit individual lender websites to obtain quotes to review and compare.

There are currently many compelling reasons to remortgage, with the top priority for most to save money. It provides an opportunity to reduce monthly mortgage payments, access better interest rates, and utilize the equity within the property. By keeping abreast of market conditions and regularly reviewing mortgage options, homeowners can capitalize on potential financial benefits and adapt to their evolving needs. However, it is essential to carefully consider the costs, fees, and terms associated with remortgaging before making a final decision.

Perhaps the lowest offered interest rate is associated with higher fees and other costs, whereas one with a slightly higher interest rate has no fees or costs, which could make the overall savings better by skipping over the lowest rate offered. Therefore, homeowners should give consideration to all quotes obtained.

Getting remortgage quotes and reviewing the opportunities offered will help a homeowner discover what financial relief or peace of mind could be gained by a new deal. Due to the ease in gathering quotes online, and because there is no obligation to gather quotes, it is certainly a smart strategy for any homeowner trying to navigate the current economic environment.