There are so many things that have been taking money out of homeowner budgets. The global pandemic, higher energy costs, higher food costs, inflation in general, and rising interest rates. Unfortunately, due to the higher interest rates, many homeowners are going to face even more strains on their financial budgets.

It has been estimated that almost 56,000 two-year loans with fixed interest rates will end in September 2023. There are other top sales moments two years ago in the housing market that will bring even more to the end of their mortgage terms. As the end of their mortgage expires, homeowners have the choice to remortgage for their chosen loan type and rate, or they can allow their loan to be moved to the lender’s standard variable rate (SVR). A SVR is usually a higher rate than what could be found with a remortgage and therefore it is usually more expensive to be moved to a SVR.

Even a tracker or other variable rate remortgage could be less expensive than a SVR.

Experts encourage all homeowners to consider shopping for a remortgage. Doing so online could put a quote in hand in a matter of minutes. It is quick and easy to find out what remortgage opportunities are available by shopping online. This could be an important step toward preparing for the coming to the end of a mortgage term. By doing so, a homeowner can put into place a strategy to help them save money.

Remortgage shopping can be done by homeowners newly in their mortgage term, coming close to it ending, or even by those that have already had their terms end and were moved to their lender’s SVR.

The strategy allowed by remortgage shopping is the ability for the homeowner to discover what deals are offered and to review and compare quotes. Going from one remortgage lender website to another will allow a homeowner to gather offers. However, by visiting the website of a remortgage broker, the homeowner could have many quotes from a variety of lenders to compare and review for the best remortgage offer. Brokers often have exclusive deals available that should not be overlooked.

Putting a strategy into place will require the homeowner to gamble on which scenario is ahead for the economy. There are those that believe more interest rate hikes are in the near future, while others believe lenders will be cutting rates and offering cheaper deals than what are available now. 

Inflation was last reported at over 10.%. The Bank of England’s inflation target rate is 2.0%. At over five times the level of the target, it is expected by many experts that there are more rate hikes needed. To escape further rate hikes a fixed rate remortgage would be a good choice for homeowners.

There are others voicing the expectation of lenders cutting rate offers in the near future as remortgage lending becomes more competitive. There are others that believe the Bank of England’s Monetary Policy Committee (MPC) will cut the rate once inflation is controlled and heads toward target, which according to some will be the end of the year. In this scenario, choosing a tracker or other variable rate deal that would reflect declining rates would be a good choice for homeowners.

No matter which scenario is expected, or which type of remortgage is chosen, saving money could be achieved when choosing a remortgage over a SVR. Whether there are more or less savings to be found will depend on whether rate hikes continue or not. As previously mentioned, a tracker or variable rate is favorable when rates are falling as it adjusts and offers savings in monthly repayments. In the case of when rates are rising, a fixed rate will shield the homeowner from rate hikes just as the estimated 56,000 fixed rate mortgage holding homeowners will have experienced for two years up until September.

Their mortgage term ending will move them from having obtained their interest rate when lenders were offering historically low interest rates to levels not seen in over a decade. There is a possibility of homeowners seeing their repayments increase by hundreds of pounds per month. The shock of this situation should be enough for homeowners to prepare and begin remortgage shopping early. 

It is expected that remortgaging will be a rush situation for many homeowners, since they will have been unaware of what the rising Bank base rate would do to their mortgage. When borrowing gets more expensive, homeowners will always have to stay aware of the situation and consider how it will impact their financial health. The fact that many of the homeowners coming to the end of their mortgage term this year will be new homeowners increases the possibility of their being caught off guard and totally unfamiliar with the benefit of remortgaging.

There were many sales booms in the housing market two years ago, and as those boosted moments age to their two-year mark, so will many mortgages age out and require a choice by homeowners. The increase in demand in remortgaging could cause a slower processing to approval of a new deal, or it could have the lending market become less competitive for attention from customers and the most attractive low interest rate offers could disappear quickly. Rather than miss out, it is encouraged that homeowners remortgage shop sooner rather than later to allow them to respond as they need to acquire the best remortgage offer possible.