Save the gambling for Vegas and remortgage
Over a million homeowners could be at financial risk should interest rates rise and some could even lose their house, according to the Resolution Foundation think-tank.
Many homeowners have delayed remortgaging and instead chose to stay on their lender’s standard variable rate (SVR). While a lender can choose to increase or even decrease its SVR at any time, these rates are often influenced by the Bank of England base rate and, given that for the last 58 months the base rate has remained at the historically low rate of 0.5%, many SVRs are at relatively low levels.
However with employment now at a record 30million there is a belief the Bank of England could rethink the current rate.
Even a minimal increase could tip many homeowners over the edge. The Citizen’s Advice Bureau has even gone so far as to describe the situation as a ‘financial ticking time bomb’. Gillian Guy is its Chief Executive:
“The rising cost of energy, food and travel has been absorbing any spare income people may have. In some cases there is little or nothing left to cope with larger mortgage repayments.”
If, by 2018, rates were to rise to 3.0% 1.12m households would spend most of their ‘take-home pay’ on debt repayments.
Lynne McCaffrey, Head of Property at Goldsmith Williams, comments:
“With the base rate static it is easy to understand why homeowners have been reluctant to remortgage.
“There has been speculation for a while now that the Bank of England could look to increase its base rate sooner than the expected rise in 2015. However these latest suggestions – based on record employment levels – would appear more tangible than previous rumours.
“With finances already tight for so many households it is essential homeowners snap out of this complacency and start to consider their remortgage options. They can do this by talking to their existing lender. However in order to secure the best deal a mortgage broker can provide a whole of market option.”
Many people are discouraged from remortgaging as they are under the illusion that it is too difficult, too lengthy, too costly or all of the above. We’re here however to clear things up!
We have a range of remortgage literature including our Guide to Remortgage as well as Remortgage Journey infographic to help explain the remortgage process. You can also get a free, no obligation online quote for our remortgage services which starts at £299 and include VAT and standard disbursements.
Content correct at time of publication