Homeowners Warned to Review Their Current Mortgage ASAP

Homeowners Warned to Review Their Current Mortgage ASAP

Homeowners are being warned to take a look at the details of their current mortgage. For those that have little equity in their property, it could be time to set a strategy in place. The Bank of England’s Monetary Policy Committee (MPC) will be meeting this week to determine if another rate hike is necessary. Experts believe it is definitely possible, especially due to the high rate of inflation, and because there is not a scheduled meeting for July. At a minimum, there is an expected increase of 0.25%, but it could be more.

Homeowners should prepare, if they are not on a fixed rate deal, to pay more. Even a slight increase in the rate could cause hardship for some homeowners, especially those that are holding a loan of high value. The interest rate is, in basic terms, what determines the cost of borrowing. It is why homeowners should seek to get the lowest interest rate possible to keep their overall costs as low as possible.

However, there are more things to take into consideration that just the lowest interest rate. For some, securing a fixed rate deal would be a strong choice. A fixed rate offers protection from rising rates during the term of the deal. Therefore, even if the fixed rate remortgage is not attached to the lowest interest rate available, the choice could offer peace of mind and be the right choice for some.

There will be those that should consider the current property values. When property values decline, and they might as the cost of borrowing increases and inflation takes a further toll on budgets, a homeowner could find it difficult to remortgage. When the property value falls below the level of the debt on the property, it is considered that the loan is underwater. Until the debt is paid down below the property value, a remortgage is not possible. Therefore, for some, choosing a remortgage now could be a good strategy since property values are strong.

By shopping for a remortgage now, a homeowner could choose from current interest rate deals, instead of the expected higher rates that could come in weeks and months ahead. It should be noted that lenders might become tighter in their lending, and offers on the market could be pulled at any time.

The next meeting of the MPC is 16 June. Should another rate increase occur, it will mean the Bank’s rate will have risen from almost zero at 0.10% in December to 1.25% or higher this month. It won’t likely be the last according to experts, which means shopping for a remortgage is a good start. It’s easy and quick to do online and with quotes in hand, homeowners could determine their best remortgage strategy and take action sooner rather than later.

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