Homeowners Moved to SVRs Should Reconsider a Remortgage Now

Homeowners Moved to SVRs Should Reconsider a Remortgage Now

In October £29 billion worth of fixed term mortgages came to end. Those homeowners were left with an opportunity to remortgage and likely save a substantial amount of money due to the historically low interest rates being offered by lenders. The homeowners that did not choose to remortgage were moved to their lender’s standard variable rate (SVR) and in comparison to the interest rate they were probably paying on the deal that ended, they are saving money, too. Just not as much of a savings, nor is there much security that the savings will last for long.

A recent report has forecasted that the Bank of England’s Monetary Policy Committee (MPC) will begin increasing the standard base interest rate in response to inflation as early as next year. The increases are expected to happen frequently to control inflation and could within 24 months be in double digits. That is quite an increase and would put the Bank’s base rate at a level seen prior to the economic crisis. Borrowing will cease to be as cheap as it has been for over a decade and homeowners could be put in a financial squeeze.

Experts are encouraging homeowners to shop around for a remortgage if they allowed their mortgage deal to expire and were moved to their lender’s SVR. While the interest rate might be lower than what they were used to paying, it could be double or more what is available with a remortgage. Also, without a fixed rate remortgage their SVR will increase with the Bank’s increases and it will be forcing them to pay more than necessary or hurry to remortgage and hope to find an affordable deal.

Choosing a fixed rate long term remortgage could be a wise choice. Not only will it lock in a low interest rate which would be a safety net against rising rates, but it would do so for a long term. 

Interest rate offers are not usually as low with fixed rates as they are with variable rates, and the longer the term the more likely the offered interest rate will be higher than if choosing a lower rate, but it could be worth it. Locking in a low rate for years to come verses months could end up saving a homeowner a lot of money when others are facing financial strains and rushing to remortgage at rates less appealing that offered today.

Shopping online is a good place to start. It is easy and quick to obtain quotes in which to discover what deals are available. Shopping with remortgage brokers could be even more helpful as they will offer quotes from a variety of lenders and often have exclusive deals that lenders do not offer directly.

The advice to shop for a remortgage is not only good for those that have had their mortgage deal end, but even for those that are close to having theirs end and those willing to pay a penalty fee to end theirs early. With low interest rate remortgage deals available now, that are forecasted to begin disappearing in months, it could be smart to lock in the best remortgage for a homeowner’s needs now, rather than later, and save as much as possible while they can.

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