Remortgage Savings Grow as Lending Competition Grows

Remortgage Savings Grow as Lending Competition Grows

The opportunity to save money with a remortgage has increased. With low interest rates being offered, more borrowers are interested in the lending market and lenders want to gain their attention. To do so, lenders are offering amazing deals. The growing competition in the lending market has brought lower interest rates and more savings to borrowers, especially homeowners seeking a remortgage and home buyers seeking a mortgage.

Although there have been many attractive deals pulled from the market, even better ones have replaced them. A lender recently announced an interest rate deal below 0.80%. 

The eye on lower interest rates can be confusing for some borrowers, homeowners and home buyers alike. A simple way to think of the interest rate is that it is the cost of borrowing. The lower the interest rate, the lower the cost overall of the repayment amount paid back to the lender. There are of course other expenses, such as valuation or legal fees that can accompany a loan, but the main determination of cost can easily be associated with the interest rate.

The lower the interest rate offering, the more money that can be saved. For home buyers, starting out with a lower interest rate is helpful in affording the property. If the home buyer secures a fixed rate with a long term deal, then even better. They will be locking in the savings for the length of the deal. This can offer a safety net against rising interest rates in the months and years to come.

For homeowners, the opportunity to secure a fixed rate remortgage could offer the same peace of mind against rising rates. A remortgage is often misunderstood by homeowners as being a new loan that will take them longer to pay off and more costly. This is likely due to the many types of remortgages available. The fact is that a remortgage can actually help a homeowner save a lot of money.

A remortgage could be obtained to simply secure a lower interest rate. It could also be obtained to spread out the remaining balance for a longer term to lower repayment amounts. Another type of remortgage is one in which the built up equity is turned into cash. Many homeowners are reporting they are using the cash to upgrade and improve their current home to make it more pandemic lifestyle friendly. Meanwhile they have secured a lower interest rate and are saving hundreds of pounds per month on their repayments.

Homeowners are encouraged to become familiar with their mortgage deal. When their current deal ends, they have the opportunity to remortgage or to be moved to the lender’s standard variable rate or SVR. A recent report showed that a remortgage interest rate could be half or less the interest rate of an SVR. Since no one should desire to pay more than necessary, shopping around for a remortgage could truly be the smart move to save a substantial amount of money while they can.

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