Remortgages are primarily sought out for the ability to save money. With a lower interest rate, a homeowner might in some instances save a substantial amount of money, which could be possible with the current historic low rates being offered by lenders. Other times, a remortgage is secured to keep from having to pay more than necessary by securing a fixed interest rate to protect against rising rates. It can also put cash into a homeowner’s hand with an equity cash release remortgage. During the pandemic, it appears a remortgage is also offering peace of mind.

For those that seek to save money with a lower interest rate through remortgaging, the discovery that one simply has to convert to their lender’s standard variable rate (SVR) and sit out paying more than necessary is hard news to take. Yet, that could happen to many homeowners should the house prices decline as is expected by one think-tank group, the Resolution Foundation, in response to predictions made by the Office for Budget Responsibility (OBR). The ability to remortgage could disappear for many homeowners with the onset of negative equity.

Home buyers have been busy taking advantage of the low interest rates being offered with mortgages. However, at the same time, homeowners are missing out. The latest data from the Bank of England revealed that purchase approvals were unexpectedly more robust during the pandemic. Homeowners on the other hand, with savings to be found, bypassed the ability to remortgage as expected.

The latest data from LMS revealed homeowners that remortgaged were big savers with the opportunity to get a lower interest rate deal. Those homeowners that chose to remortgage in July saw their monthly repayments decline by an average of £200.76. The most popular remortgage product for remortgaging borrowers was a five year fixed rate deal. 

Homeowners are being encouraged to take a glance at their current mortgage. Many could be paying more than necessary on their mortgage and the money lost to such an oversight is gone forever. In a time when saving and cutting down expenses is so important, no one would want to be putting out more money from their household budget than needed, but apparently the number of homeowners doing so could be in the hundreds of thousands if not past a million.

When a borrower takes out a mortgage to purchase a home, that monthly repayment expense can often be the largest of all expenses going out and perhaps for most the largest overall expenditure so far in their lives. That sort of commitment can be massive and the expense can be as well. Yet, the mortgage deal obtained at the beginning does not have to be the same commitment, for with a remortgage a homeowner could obtain a lower interest rate and save money. Their monthly financial commitment could be less. Since no one should pay more than they have to, then it makes sense to remortgage and seek to save money.