Homeowners look for a remortgage for many different reasons but one thing most of them have in common is that they are looking for the cheapest remortgage deal possible by choosing a low interest rate. The interest rate will determine the cost of borrowing and so every homeowner is looking to arrange a cheap interest rate. Unfortunately, seeing only the interest rate level of a remortgage offering can lead to “interest rate blindness”. If the only criterion for a remortgage is a cheap interest rate then that can lead to the wrong remortgage deal.
Homeowners should focus on the purpose of the remortgage and what could help them beyond a cheap interest rate. There are many remortgage products offered by lenders. They put out so many different remortgage products in an effort to help fill the needs of different homeowners. Homeowners should look beyond the interest rate level and shop to see if there are other benefits from different products that could be as important as a cheap interest rate.
Not all remortgages are alike just as not all homeowners’ needs are alike. Some remortgages have fixed rates while others are trackers or interest only remortgages. Some remortgages have a short term offering before the deal expires while others are long term. If a homeowner expects their financial position to remain steady they would want to pick a long term deal while those that expect financial changes that would allow them to pay more in the near future would want a shorter term. Some remortgages include the ability to pay overpayments. If a homeowner finds this an advantage then they would want a remortgage deal that includes the possibility of overpayments. These are all things that deserve the attention of a homeowner as much as the interest rate.
Homeowners should beware of low interest rate remortgages that involve high fees. To offset the deep discount of an interest rate offering some lenders make up for it by charging high fees within the remortgage offering. This is another reason that a homeowner should look beyond a cheap remortgage interest rate. By only choosing a cheap remortgage interest rate a homeowner could actually be choosing an expensive deal versus a cheap deal due to the attached fees and costs of remortgaging. All costs should be considered in a remortgage to determine if the deal is a good one.
Some remortgages will have incentives such as free valuations or legal work attached to them. These too can be considered as a benefit and if it is an important benefit can have a bearing on whether the remortgage deal is the best one.
Interest rate levels should be important to a homeowner but they should take the interest rate offering of a remortgage deal into consideration as a whole with all other parts of the remortgage. If a fixed rate is important over a tracker and the interest rate is a bit higher for the fixed rate remortgage then the fixed rate remortgage is the right choice for that homeowner. The right remortgage deal involves choosing the deal for reasons beyond just the interest rate alone.
