The mortgage journey can come with its ups and downs, however, it can be fulfilling. Going through the process turn into one of the following positive outcomes:
Whatever route you go down, in the future, you will eventually come to the end of your mortgage term. You can either sell up and upsize/downsize into a new property.
Remortgage is a popular option for customers who are looking to sell their portfolio to the tenant or another buyer and look at other opportunities.
In the case where you use the proceeds from a new mortgage to pay off a pre-existing mortgage, this is a Remortgage. It can be beneficial when you are looking to find lower interest rates and better mortgage terms.
With the 20 years or so experience with Malcolm Davidson (Director / Mortgage Advisor), we felt it would be helpful to collate all the options you can choose from when it comes to taking out a Remortgage and create a guide.
Typically, your initial mortgage deal will usually last 2-5 years and include low fixed rate or possibly discounted rates. You might get placed on a tracker mortgage which means your mortgage will follow the Bank of England’s base rate.
It’s likely you will get moved along to the lenders Standard Variable Rate (SVR) as soon as your term ends. This type of mortgage has an interest rate that can fluctuate because it depends on what the lender wishes to charge.
Unlike a tracker mortgage, this doesn’t follow the Bank of England’s base rate. Many choose to look at Remortgaging for better rates to save money on their monthly payments due because SVR and tracker mortgages are a more expensive route to choose.
You might find that 2-5 years into occupying your home that something isn’t quite right. It could be you are wanting an extra room/larger living space for your kids/belongings, a new kitchen, a new office or loft conversion.
Instead of moving into a larger house, it might be best you look into advice in order to release equity so you can fund any renovation costs. Obtaining planning permission and funding can seem like a nerve-wracking concept, however, it can be a less stressful option compared to finding a new home.
Furthermore, it can reap rewards when going through the process of a development in your current home and can pay off in the future with a potential increase in the value of the property if you look to sell up or rent out in the future because of the expansion of space.
Another reason why some may look into Remortgage in Halifax is for a better mortgage term through reducing the length or switching to a more flexible product.
Even though reducing the size of your term can mean you aren’t tied down to your term for as long, it does mean your monthly repayments will be a lot higher. The longer your term, the lower the payments will be over time.
In some cases, you might look into getting a better mortgage term by looking into a more flexible mortgage term when they remortgage. This option can be appealing to many homeowners because of the benefits like having the option to overpay.
Furthermore, homeowners also have the ability to move the same mortgage and rates over to another property if they decide to move at any point in the future. As mentioned, you are able to overpay which means you can pay off your mortgage as quickly as you’d like.
Despite a flexible mortgage sounding a lot more appealing, they usually come in the form of a tracker mortgage. Again, this type of mortgage follows the Bank of England base rate which means your payments may change depending on interest, this can make them a little unreliable.
There is a level of equity in everyone’s properties. This is summed up by finding out the difference between the remaining total on the mortgage, and the current value of the property.
As mentioned previously, you do have the choice to use the equity to fund home improvements, however, there is a number of options out there for you.
Other options you could use the equity to cover long-term care costs, so cover their income, to pay off an interest-only mortgage, or to have free spending money.
Sometimes, Buy to Let landlords will use Equity Release so they can cover their deposit for buying another property in the future as an addition to their portfolio.
Using Equity Release in order to pay off any unsecured debts that you may have accumulated over time is a more popular options people go for.
Debt Consolidation is based on your credit rating as well as amount on how much you’re entitled to and the value of the property. Furthermore, this could result in the limitation of the amount you can have.
In order to pay off your previous mortgage and your debts, it’s required that you borrow more than your outstanding mortgage amount. Either way, your monthly repayments will most likely be higher.
As much as this isn’t the most perfect situation, it’s very helpful that the option is out there should an unfortunate situation arises.
There is options out there is you do have a significantly damaged credit rating, however, this situation will not be as simple. Therefore, it’s important that you seek Specialist Remortgage Advice in Halifax before progressing.
Even doing this doesn’t mean it’s guaranteed. Before consolidating and securing any debts again your home, you must seek Mortgage Advice in Halifax.
If you are coming to the end of your term and are wanting to look into the option available for Remortgaging, get in touch with an open and honest Mortgage Broker in Halifax.
Having an advisor by your side can allow you to discuss your situation and future in order to get the best plan of action when going forward on your mortgage journey. We always work hard to make this process quick and smooth.
When you start out looking for a mortgage you will soon realise that there are lots of different options available. If you are a First Time Buyer in Halifax, you will probably be shocked to how many there are.
Below you will see a list of the most popular types of mortgages available on the market and hopefully. If you have any questions regarding any of the below mortgage options, then please do not hesitate to contact us.
A fixed rate mortgage means that your mortgage payments are going to stay the same for a set period of time. You can set the length of which you want to fix your payments for, typically this being 2, 3 or 5 years or longer. No matter what happens to inflation, interest rates or the economy you know that your mortgage payment, usually your biggest outgoing, will not change.
A tracker mortgage means that your interest rate will track the Bank of England’s base rate. So in other words, the lender that you are with does not actually set the rate themselves. You will be paying a percentage above the Bank of England base rate. In an example, if the base rate is 1% and you are tracking at 1% above base rate, that means you will be paying a rate of 2%.
When you take out a repayment mortgage this means that each month you are paying capital and interest combined. So as long as you keep your payments going for the full length of the mortgage term, the mortgage balance is guaranteed to be paid off at the end and the property becomes yours.
This is the most risk-free way to pay your capital back to the lender, in the early years it is mainly the interest that you are paying and your balance will reduce very slowly especially if you have taken out a 25, 30 or 35-year term. This situation switches in the last ten years or so of your mortgage, where your payments are paying off more capital than interest and the balance will come down much faster.
Whilst many buy to let mortgages are set up on an interest-only basis, it is much more difficult to get a residential property on an interest-only basis.
It is much less likely for lenders to offer an interest only product now. However, there are certain circumstances where this can be an option. These include downsizing when you are older or have other investments what you will use to pay the capital back. Lenders are very strict when it comes to offering these products now and the loan to values are a lot lower than back in the day.
With an offset mortgage, the lender will set you up a savings account to go alongside your mortgage account. How this works is that let’s say you have a mortgage balance of £100,000 and £20,000 is deposited into your savings account, you only pay interest on the difference, so in this case £80,000. This can be a very efficient way of managing your money, especially if you are a higher rate taxpayer.
When your introductory mortgage deal comes to an end your mortgage lender may offer you a new deal to stay with them, this is known as a product transfer.
Unfortunately, lenders do not always reward your loyalty and the offer they make you may not be competitive with deals you could get elsewhere. Even more annoyingly, these product transfer rates are not as good as the deal they offer new customers either!
Whilst swapping to a new deal with your current lender may well be fairly easy online, it is always in your interest to see what other deals you may be eligible for. Lenders will also tempt you to effect a new deal online without taking advice.
This can be really dangerous because if you do this without advice you are waving goodbye to all the valuable consumer protection you would otherwise have benefitted from.
We have seen numerous examples of customers affecting these “follow-on” deals and locking themselves into an inappropriate deal. Because they opted out of advice then they have waived a lot of their rights in terms of making a complaint.
We did have a recent case where a customer who was pregnant did this and was declined for a small further advance to fund some necessary home improvements a few months later. She then had to pay a hefty early repayment charge to swap to a new lender who would grant her the additional funds.
If we think a product transfer is the most suitable deal for you we will recommend that as a course of action for you and if we arrange the mortgage for you as a mortgage broker then all the regulation and consumer protection will apply.
In short, even if your requirement seems straightforward we recommend you always take advice – a second opinion costs nothing and making a mistake when taking a new product can be costly.
The remortgage market is highly competitive and savings can generally be made by searching the market for a new deal. This is why it might be within your best interests to speak to a Remortgage Advisor in Halifax. they will support you through the whole remortgage process and help you find that 1/1000 amazing mortgage deal!