Homeowners Borrowing More During Remortgage Due to Low Interest Rates

Homeowners Borrowing More During Remortgage Due to Low Interest Rates

With interest rates at historic low levels, borrowing is cheap. So cheap in fact that it has been reported that some lenders are offering remortgage deals at less than 1%. It’s likely as close as we’ve seen to borrowing interest free. This is prompting homeowners to seek not only a remortgage with a lower interest rate to save money, but to borrow more with their deal. 

Many are said to be making home improvements. Rather than being a part of the wave of home movers to take residence in their pandemic lifestyle home with extra space and desired features, homeowners are turning their current home into the very best version of itself.

According to LMS, 49% of homeowners that remortgaged in July borrowed extra cash. The average borrowed additional amount was £16,389. 

About one third of homeowners remortgaging were doing so to secure a lower interest rate and turn their built up equity into cash. Equity is basically the part of the home you own. Take into consideration the value of the home, subtract the outstanding loan debt, and the rest is equity. Since most homes grow in value, and many have done so in outstanding amounts during the pandemic, homeowners could be pleasantly surprised at the value of their home and the equity they have built either due to paying down debt on the home, increased home values, or both.

With an equity cash release remortgage, the money can be used the same as if the homeowner borrowed additional funds. The cash could be used for improvements or upgrades to the property. Of course, it could be used for other needs of the homeowner as well. Keep in mind improvements to the home could in some cases add additional value to the home, such as more efficient and upgraded heating and cooling systems would do for a property.

For homeowners considering borrowing out their equity or additional funds to put cash in hand, an easy process to discover what opportunities are available is to shop online. Most remortgage brokers and lenders offer the ability to get a quick quote. After a few answered questions, quotes of possible remortgages with lower interest rates will be available to review. It is a good start for discovery to then narrow down possible deals. 

Interest rates are still historically low, deals are abundant, and lenders are competitive which means great remortgage deals are available offering savings as well as the benefit of borrowing additional funds or cashing out equity.

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