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Homeowners Offered Variety of Deals Should Look Past Lowest Interest Rates

Homeowners Offered Variety of Deals Should Look Past Lowest Interest Rates

There are millions of homeowners in need of a remortgage this year because their mortgage terms expire. As their mortgages end as well as their current interest rate, homeowners will either choose a new deal or their lender will move them to their standard variable rate (SVR). Avoiding the SVR is a better choice as remortgaging normally offers the lowest interest rate. By remortgaging, a homeowner could discover an interest rate half of what is available in a SVR. However, finding the right remortgage requires a bit of work, yet much easier than expected.

Experts encourage homeowners to shop online for a remortgage for the easiest effort. Online remortgage shopping is fast and easy and obtaining a remortgage quote could be done in minutes. 

For an easier effort, visiting the website of a remortgage broker is similar to a one stop shopping experience. Brokers work with many lenders for the benefit of the homeowner. With a variety of lenders vying for the attention of a broker’s client, exclusive deals could be found as well as competitive offers. In a matter of moments, homeowners could have many quotes from several lenders. 

In the process of reviewing quotes, experts encourage homeowners to not be solely focused on the lowest interest rate offers, despite the fact lower interest rates save money against higher rates. The reason is that the lowest interest rate can often be associated with the highest fees. 

In looking past the lowest rates, which could have the highest fees, the homeowner might discover the best deal. Taking into consideration the overall savings is important. Therefore, the homeowner should look beyond the lowest interest rate and should consider all fees and other costs of remortgaging. In doing so, the greatest savings could be discovered.

There are also other reasons to bypass what would be the obvious choice of a low interest rate in a remortgage. Many homeowners would consider security and peace of mind an important part of choosing a remortgage deal. Therefore, other considerations such as whether the offer is a fixed rate might make one deal more valuable than the other as the rate would be locked in and offer no worry if rates would rise and become more expensive during the deal’s term.

Some might consider a shorter term offers a better situation than a longer term, such as if they believe rates are likely to decline in the near future. There are also loan types such as trackers and variables that might better suit a particular homeowner’s unique needs in a remortgage.

Experts do encourage homeowners to consider the current deals offered if they are close to their mortgage term ending or if they have already had it end and they have been transitioned to their lender’s higher and riskier standard variable rate (SVR).

Many have waited to remortgage and have allowed their loan to be moved to their lender’s SVR in the hopes that rates would be cut in the near future. The Bank of England’s Monetary Policy Committee (MPC) had been expected to cut the standard base rate in early spring, but the forecast for a decline in the rate has been put off until the end of summer or early autumn. 

This week the MPC voted to hold the base rate steady for the seventh consecutive MPC meeting. There is not going to be a scheduled meeting in July, and the next chance of a rate cut is in August. As long as there are no surprises in the economy or the inflation rate, which this month reached target of 2.0% for the first time in three years, the MPC will likely offer relief to borrowers with the first rate cut since March 2020.

It should be considered that when the rate is reduced it will be minimal according to forecasts. 

The latest MPC meeting resulted in two of the nine MPC members voting for a cut of 0.25%. This would take the rate to 5.0%. Waiting for a rate cut could cause some borrowers to miss out on the opportunity of the rates available now. There are lenders offering deals that are already reflective of the expected rate cut as lenders are entering a competitive period and borrowers simply must take a few moments to shop for a deal.

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