The mortgage journey is a rewarding process. Despite its fair share of up and down’s, you will end up with one of the following:
No matter which path you take on. There will eventually come a time when your mortgage term is approaching its end. Your option is to sell up and upsize/downsize into a new property.
Maybe you are looking to sell your portfolio to the tenant or another buyer and look at other opportunities? The most popular option, however, is a Remortgage.
A Remortgage is where you use the proceeds from a new mortgage to pay off a pre-existing mortgage. It can be an excellent way to find lower interest rates and better mortgage terms.
Utilizing the 20 years or so experience with Malcolm Davidson (Director / Mortgage Advisor), we thought it best to put together a quick-thinking guide to all the options you could choose when it comes to taking out a Remortgage.
Your initial mortgage deal will typically last 2-5 years and feature low fixed rates or possibly discounted rates. In some cases, you may even get placed on a tracker mortgage, which follows the Bank of England’s base rate.
When your term ends, you will likely get moved along to the lenders Standard Variable Rate (SVR). In short, an SVR is a mortgage with an interest rate that can change depending entirely on what the lender wishes to charge.
In any case, this does not follow the Bank of England’s base rate like a tracker mortgage. We find; these are usually the most expensive paths to take, leaving many to look at Remortgaging for better rates, which will hopefully save you money on your monthly repayments.
2-5 years into occupying your home, you may decide that something isn’t quite right. Maybe you need an extra room or larger living space for your kids/belongings, a new kitchen, a new office, or loft conversion.
Rather than you move into a larger house, consider seeking advice to release equity with a Remortgage to cover the costs of these. Though it may seem like a frightening concept having to obtain planning permission and fund/manage your project.
You could argue it’s a lot less stressful and more rewarding than the process of finding a new home. Selling your current one and moving your belongings.
In the long run, this may prove even more beneficial as creating more space and will likely increase the value of your property, handy for if you ever do decide to sell up or rent out.
In some cases, people may wish to Remortgage in Newcastle for a better mortgage term, by reducing the length or switching to a more flexible product.
Reducing the size does mean you won’t be paying back your mortgage for as long, so aren’t entirely tied down forever, but as such your monthly repayments will be a lot higher. The longer your term, the lower the payments will be over time.
Some opt for a more flexible mortgage term when they remortgage. The benefits provided by this option can prove appealing to some homeowners. You may gain the ability to overpay,
Resulting in being able to pay your mortgage off as quickly as you’d like, as well as being able to carry the same mortgage and rates over to another property, should you decide to move at any point in the future.
Though a flexible mortgage sounds near perfect, they usually come in the form of a tracker mortgage, which as mentioned earlier on follows the Bank of England base rate. Meaning one month of your payments could vary based on interest, making them a little unreliable.
Everyone has a level of equity in their property, how it works is with a difference between the remaining total on the mortgage, and the current value of the property.
As touched upon briefly, you can choose to opt-in for some for home improvements; however, there are more options available for you out there.
Some use it to cover long-term care costs, to supplement their income, to have a holiday, to pay off an interest-only mortgage, or to have free spending money.
In some cases, we find that Buy-to-Let landlords will use Equity Release as a means of covering their deposit for buying a future property to add to their portfolio.
On the topic of Equity Release, another big one people use it for, is to pay off any unsecured debts you may have accrued over time.
Firstly though it may seem easy enough, Debt Consolidation bases not only the amount on how much you’re entitled to and the value of the property, but also your credit rating. Additionally, this could mean you are limited in the amount you can borrow.
Secondary, to pay off your previous mortgage and your debts, you will need to borrow more than your outstanding mortgage amount. In any case, your monthly repayments will most likely be higher.
Though not an ideal situation, at least you can rest assured that should you find yourself dealt an unfortunate hand, you do have some options out there.
Should you find yourself with a significantly damaged credit rating, you do still have options to choose from. However, these will not be easy and require very Specialist Remortgage Advice in Newcastle before going forward.
Even then, there is no guarantee. You should always seek mortgage advice in Newcastle before choosing to consolidate and secure any debts against your home.
If you are reaching the end of your term and are wondering what your option may be for Remortgaging. It is worth your time to Get in Touch with an experienced and trusted mortgage broker in Newcastle.
An advisor will be able to discuss your circumstances and future goals to create the best plan of action for you in the next step of your mortgage journey. We aim to ensure this process quick and smoother approach than your first time.