Homeowners Losing Out on Savings Due to Misplaced Loyalty

Homeowners Losing Out on Savings Due to Misplaced Loyalty

Home buyers that have been approved by a lender to purchase their first home can have a deep loyalty to the lender. When it comes to remortgaging, loyalty could be very much misplaced and the homeowner could be losing out on a large savings. Rather than be loyal to the lender that put the homeowner into the house, loyalty should be placed strongly with their budget and financial opportunities to find not only savings, but a safety net for the months and years ahead.

When a homeowner comes to the end of their mortgage deal, they have the opportunity to secure a new agreement with their lender or a different one. The new deal will be much like their first one as it will need to be approved by a lender, it will have an interest rate offer, and it will exist over a particular term such as two years or five.

If the homeowner does not actively seek a remortgage, the lender will convert the mortgage to the lender’s standard variable rate or SVR. A SVR in some situations could be a good choice if it has a lower interest rate and the homeowner is comfortable with the interest rate varying either up or down at the will of the lender. The interest rate change could of course happen quickly and leave the homeowner paying more and rushing to remortgage to escape a higher rate. That is the risk with a variable rate, including a lender’s SVR.

According to recent reports, the average SVR from top lenders is double or more the interest rate that could be found with remortgaging from the same lenders. Since the interest rate determines the cost of borrowing, it would come as a shock that a homeowner would be paying twice or more what they would pay with a remortgage.

A remortgage could offer substantial savings with one report determining that homeowners could save £400 or more per month. Rather than pay more than necessary, a homeowner would be encouraged to consider a remortgage.

Homeowners could find other benefits from remortgaging. By securing a fixed rate remortgage, the homeowner could lock in the low interest rate for the length of the loan’s term. With historical low interest rates being offered, securing a low rate with a fixed remortgage could be a safety net against rising rates in the near future.

Equity cash release remortgages are also a consideration for homeowners. By turning built up equity into cash, a homeowner can have cash in hand to fund any need they might have. Many homeowners have reported they were going to use their cash to upgrade and improve their home. For instance, with rising energy costs and the winter approaching, a homeowner could choose to upgrade their home to be more energy efficient. However, if an upgraded kitchen or a converted area into a home office is important then that could happen with the equity into cash remortgage opportunity.

Loyalty is a noble thing, but when it comes to being loyal to a lender rather that secure the very best remortgage for the homeowner, it is misplaced. There are very good lenders and remortgage brokers that could also win over a homeowner’s loyalty just as the previous one has done. 

Shop online and get quick quotes to discover what remortgage deals are possible. With a very attractive deal that best fits the homeowner’s needs, including major savings, it could be easier than expected to push old loyalty aside in favor of easing the household budget and giving another lender a chance to gain loyalty as the one in the past. 

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