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A Guide to Remortgages in Newcastle: Top Reasons to Consider

Throughout your mortgage journey, you will experience a mix of highs and lows.

Whether you have settled in your dream home, started with a stepping stone property to enter the property market, or invested in a property for income generation, there will come a time when your initial fixed-rate or introductory period is ending.

This is an important point where you have several options to consider. One option is to sell your current home, either to upsize or downsize. This allows you to find a property that better suits your changing needs and circumstances.

For investors, selling the property to tenants or another buyer opens up opportunities to explore new investment ventures and potentially increase your returns.

The most common and widely chosen option is to pursue a remortgage in Newcastle. This involves switching your existing mortgage to a new one with different terms, such as a new interest rate or mortgage term.

What is a remortgage in Newcastle?

The first step in understanding a remortgage is to familiarise yourself with what it means. A remortgage involves obtaining a new mortgage to repay your existing mortgage, using the funds released in the process.

When it comes to remortgages in Newcastle, there are numerous options available, ranging from significant decisions to more minor considerations. To look deeper into the topic and gain an in-depth understanding of remortgages, we have created a helpful video guide.

In this video, Malcolm Davidson, our company director & mortgage advisor in Newcastle, and the host of our YouTube channel MoneymanTV, provides valuable insights into all the essential aspects of remortgages.

Remortgage in Newcastle for Better Interest Rates

Typically, when you initially secured your mortgage, it was likely set for a period ranging from 2 to 5 years, featuring fixed or discounted rates. Alternatively, you may have opted for a tracker mortgage, where your interest rate fluctuates in line with the Bank of England’s base rate.

As this initial mortgage deal comes to an end, you will typically be transferred to your mortgage lender’s standard variable rate (SVR). An SVR mortgage operates differently, with an interest rate that can change at the discretion of your lender.

Unlike a tracker mortgage that closely follows the Bank of England’s base rate, an SVR mortgage can be riskier for homeowners. Your mortgage lender is not obligated to align their rates with the recommended rate and may charge above it.

As a result, SVR mortgages tend to be more expensive for homeowners, and it is uncommon for a mortgage advisor in Newcastle to recommend staying on this type of mortgage.

Instead, many homeowners in Newcastle choose to remortgage onto a new deal, typically a new fixed-rate mortgage. This allows them to secure more favourable and consistent interest rates, resulting in potential savings on their monthly mortgage repayments.

Remortgage in Newcastle for Home Improvements

As your fixed or introductory period comes to an end, you may find yourself needing a change in your living space. This could be due to the need for an extra room, additional living space, or the growing trend of creating a home office.

Traditionally, the solution would be to move to a new property that better suits your new requirements. This can be disheartening considering the time and effort you have invested in your current home, which has likely become a significant part of your life.

The good news is that there is an alternative option: you can make the desired changes to your current home while staying in it. Many homeowners explore the possibility of accessing funds from the equity in their home to finance renovations, modifications, or extensions that meet their new needs.

Although it may involve some stress in terms of obtaining planning permission and managing the project or funding, it can be argued that this route is less stressful and even more rewarding than selling your home, purchasing a new one, and going through the process of moving.

Over time, these home improvements can prove to be a wise investment. By creating more space and incorporating high-quality craftsmanship, the value of your home is likely to increase. This means that if you ever decide to sell, you have the potential to make a greater return on your investment.

Remortgage in Newcastle for Changes to Your Term

Sometimes, homeowners consider a remortgage in Newcastle to make changes to their mortgage term. This typically involves either reducing the length of the term or switching to a more flexible product.

Reducing the term of your mortgage means that you won’t be making mortgage payments for as long, freeing you from long-term commitments. It’s important to note that this may result in higher monthly mortgage costs. Generally, longer mortgage terms come with lower monthly payments.

Another option is to remortgage in Newcastle onto a more flexible deals. This flexibility can be advantageous for many homeowners, making it an appealing choice.

With a flexible mortgage, you may have the ability to overpay on your mortgage, allowing you to pay it off more quickly. Additionally, you might be able to transfer your mortgage and interest rates to a new property if you decide to move in the future.

While the idea of a flexible mortgage sounds appealing due to the freedom it offers, it often comes in the form of a tracker mortgage linked to the Bank of England’s base rate.

This means that your monthly mortgage payments could fluctuate as the base rate changes, resulting in potentially unpredictable payment amounts each month.

Remortgage to Release Equity in Newcastle

Every homeowner will find that their property holds a certain level of equity, which represents the difference between the outstanding mortgage balance and the current value of the property.

For example, if you have a house valued at £130,000 and still owe £70,000 on your mortgage, you have £60,000 of equity. As mentioned earlier, this equity can be utilised for various purposes such as home improvements, modifications, renovations, and extensions.

Equity can also serve other purposes depending on your needs and circumstances. It can be used to cover long-term care costs, pay off an interest only mortgage, supplement your income, or even fulfill personal desires like a family holiday – within reasonable limits, of course.

In some cases, landlords with buy to let mortgages in Newcastle may opt to remortgage their property to release equity, using the funds as a deposit for further additions to their property portfolio.

If you’re a homeowner aged 55 or older and your property has a minimum value of £70,000, it may be worth exploring your options for equity release or considering alternative solutions.

To learn more about later life lending or determine if you qualify for such opportunities, feel free to book a free later life mortgage appointment and have a discussion with one of our dedicated later life mortgage advisors in Newcastle.

To understand the features and risks of equity release and lifetime mortgages, ask for a personalised illustration.

A lifetime mortgage may impact the value of your estate and it could affect your entitlement to current and future means-tested benefits. The loan plus accrued interest will be repayable upon death or moving into long-term care.

Remortgage to Consolidate Debt in Newcastle

Consolidating debt is a significant reason why many individuals seek remortgage advice in Newcastle. They often aim to pay off accumulated unsecured debts over a period of time.

Although the concept may appear straightforward, a remortgage in Newcastle for debt consolidation considers various factors.

The amount you can borrow depends not only on the outstanding unsecured debts and property value but also on your credit rating. This may impose limitations on your borrowing capacity.

Moreover, to settle your previous mortgage and cover your debts, you will likely need to borrow a higher amount than your remaining mortgage balance. Consequently, this may result in higher monthly payments than initially anticipated.

While it may not be an ideal situation, it’s reassuring to know that there are options available if you require assistance with your finances.

Even if your credit rating has declined, there may still be possibilities, although it is essential to seek specialised remortgage advice in Newcastle. It’s important to note that even with professional guidance, proceeding with the remortgage may not always be feasible.

You should think carefully before securing other debts against your home. By adding your unsecured debts to your mortgage, which is secured on your home, you are potentially putting your home at risk if you cannot make the required repayments.

Although the total monthly cost of servicing your debt may have reduced, the total cost of repayment may still have risen as the term of your mortgage is longer than it may have taken to repay the debts originally.

Book a Free Remortgage in Newcastle Review Today

As you approach the end of your mortgage term and contemplate your next steps, such as a remortgage in Newcastle, it is highly recommended to reach out to a reliable and committed mortgage broker in the area.

By consulting with a mortgage advisor in Newcastle, you can receive a comprehensive evaluation of your circumstances and future aspirations.

This will enable them to guide you in determining the most suitable course of action. Our goal is to ensure that this process is smoother and faster than your initial mortgage journey.

Date Last Edited: June 15, 2023

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