Recent pronouncements from the FSA, along with current debates about interest rates, are causing many homeowners to look at their remortgage options.
The economic outlook is murky, with the Bank of England today expected to lower its forecast for growth, while signalling that inflation will rise on the back of the planned VAT increase. That makes the future direction of rates uncertain.
Many who are paying their lender’s standard variable rate will consider signing up to a new deal in advance of any rise in rates. Borrowers looking for peace of mind may well decide on a fixed-rate deal, or perhaps a capped deal – i.e. one with an interest rate which fluctuates below a ceiling set in advance. With Bank of England base rates still at 0.5% there are some highly competitive deals available.
One group who will need to think carefully about their mortgages are borrowers currently on an interest-only deal. Many of us seized the chance of a temporary arrangement when household budgets were under heavy pressure during the recession. The FSA has signalled its concerns about interest-only – particularly homeowners being left with no means of paying off their mortgage loans at the end of the term. Some lenders are now discouraging interest-only deals. Again, record low rates should make the option of remortgaging more palatable.
Some homeowners will judge that staying on a lender’s SVR remains a reasonable option for now. Many may find they could save on their monthly outgoings – even while borrowing more in some cases. It’s worth talking to a reputable broker, such as Go Remortgage, before making your decision.
Remortgaging can enable borrowers to bring other debts, such as store card or credit card debts, under one umbrella. Meanwhile, homeowners cautious about moving in the current climate will find that adding an extra room to their property, with an extension or loft conversion, can be a great alternative to forking out for removal expenses.
Tags: Economy, Industry, Mortgage Rates
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