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If you are thinking of Re-mortgaging your property why not watch this helpful video provided by the Money Advice Solutions:

Re – Mortgaging

A term used when you are moving mortgage lenders, usually for a better rate of interest to save money on your monthly mortgage payments, but can also be used to raise capital by releasing some of the equity built up in your property.


There are a number of reasons why clients look to re-mortgage we have listed a number of these reasons below.


Re-mortgaging does not have to be expensive if you speak to the right people who have the knowledge and experience to project manage your re-mortgage from start to finish, someone such as me, with many products offering a free basic property valuation needed by the new lender to assess that the property is suitable security for the re-mortgage, plus paid for re-mortgage solicitor legal fees.


Yes that’s right
you will need the services of a solicitor to complete some legal conveyancing and many lenders Re-Mortgage products will chose a suitable firm to complete this for you and pick up the bill to reduce some of your Re-Mortgaging costs. There may be some cases that require additional legal paperwork that the new lender will not pay for, such as removing or adding another person to the mortgage.


You can sometimes chose to use your own chosen firm and receive a cash back towards some of their costs, if it’s an option to you, to use the lenders chosen solicitor it can work out more cost effective and can sometimes be quicker as the solicitors the lenders use tend to be big companies that specialise in large volumes of cases.

Should I Re-Mortgage my home?

If you are looking to capital raise by releasing some equity from your property, Its always wise to think carefully before you release equity as we never know what may happen to house prices in the future and its worth always keeping equity in your home in case you want to move home in the future or even downsize to a smaller cheaper to run home, over many years house prices have risen but they have also fallen then increased over time, but no one can predict what may happen with future house prices.


If you are wanting to capital raise and considering a re-mortgage, we would also discuss and consider a 2nd charge secured loan (subject to meeting the terms and conditions of your existing mortgage lender) as part of our advice and recommend process, as its possible to remain with your existing lender if best you for to do so, for reasons such as you are on a low competitive rate already, or there are early repayment charges still attached to your current mortgage, and there are other reasons that if may be best to remain with your existing lender.

Why do people Re-Mortgage?

There can be various reasons for re-mortgaging. We look at some of them in detail below but mostly you may re-mortgage because you’re looking for a better deal on your existing loan. Usually that means a cheaper interest rate but it could be that a different mortgage package suits you better – perhaps you want to fix the interest rate you pay to allow you to know what your payments will be for a set period of time.

It used to be that people took out a 25 year mortgage and stuck with the same loan for 25 years if they did not move home, until it was paid off.
These days people switch from one lender to another when they can get a better deal its always best to get non-basis advice before doing this from a mortgage adviser.

If you have enough equity in your home – that is, the mortgage is smaller compared to the property’s value – you could re-mortgage for more and take out some of the equity in cash. You can use this cash for any (legal!) purpose, but only if you really needed this additional money.

Lenders are very competitive and there are hundreds of offers to choose from so it’s worth checking out the market regularly to make sure you’re not paying more for your mortgage, employing the services of a qualified mortgage adviser can make this easier for you, this simple action could save you thousands of pounds in interest over the life of your mortgage

Is it worth Re-Mortgaging to purchase a Buy to Let?

This is a legitimate way to get into the buy to let market and can be a good plan for people who have a lot of equity in their home – meaning their existing mortgage is a small percentage of the value of the property.


By re-mortgaging you can release some of this equity and use the money as a deposit on a buy to let property. This will be cheaper than taking out a specific buy to let mortgage because interest rates can be higher for buy to let loans than residential home mortgages.


Your re-mortgage is going to be larger than the existing one so you’ll have to show the lender that you can still afford the higher repayments. But you may be able to include the rent you expect to receive as part of your income when calculating whether you can afford a bigger mortgage.


There will be times when the property is empty and you don’t have any rent coming in so you must have a contingency fund to meet your mortgage payments when this happens these are known as rental voids. There could also be occasions when the tenants stay but stop paying rent. You still have to pay your mortgage every month and, if you defaulted, you could lose the property altogether.

Can I Re-Mortgage to pay off debts?

If you’re wondering about Re-Mortgaging because you’re struggling with debts, stop and think carefully first and more importantly think about getting financial advice from qualified advisers.


Using the money you release from your home to pay off other debts can help because mortgages usually have a lower interest rate than personal loans and credit cards is not always the best option.


You’re right to take action to reduce your debts but if you increase your mortgage to pay off other debts and then find you can’t afford the Mortgage, you could lose your home.


Re-mortgaging to pay off debts is worthwhile if you feel overwhelmed by your other debts and are confident that you can afford the Re-Mortgage payments and you have worked out what’s best for you or better still received advice and can justify it’s the right option for you.


Although the interest rates are lower, you spread Mortgage repayments over a far longer period than a personal loan or credit card debt so you could pay out more in the long run.


At the same time, you should stop spending on your credit cards or even cut up your credit cards. If you are in debt because you spent too much money, you must cut back on your non-essential spending otherwise you’ll get back into debt again but with a larger mortgage to pay as well.

Can I Re-Mortgage because I’m getting divorced or splitting up from a partner?

Divorcing or going your separate ways, is a sad and difficult time, not least because you have to separate your finances. Your home is probably the biggest asset you have to split between you.


Assuming you own it jointly with your partner, you have three choices:
• Sell the house, repay the outstanding mortgage and split what’s left
• Keep the house, take over the mortgage yourself and buy out your partner
• Allow your partner to take over the mortgage and buy you out.


If you want to keep the property yourself, you should talk to your lender straightaway to ask if you can transfer the existing joint mortgage to your name alone. Before agreeing, the lender will want to make sure you can afford the repayments on your income alone.

If the lender doesn’t agree, you might be able to Re-Mortgage the property with a different lender.

You’ll become the sole owner of the property which involves legal work to transfer your ex’s share to your name known as transfer of equity.

Anyone in a tricky position who wants to Re-Mortgage can speak us in private and in confidence we have helped many of our clients over the years through difficult times.
If you are reading most or all of the above and are considering what might be the best options for you and require some non-basis advice from a qualified, knowledgeable, experienced adviser then I would be only too happy to help you out, please get in touch.

 

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