The mortgage journey can come with its highs and lows, however, the ultimate goal will either involve you settling down in your dream home to start a family perhaps, a step up to get you further up the property ladder or an investment purchase to provide another income source.
Whatever route you may go down, both will eventually come to a point where your mortgage term will end. You might sell up and upsize/downsize into a new property. If you are a landlord, you might want to sell your portfolio to the tenant or another buyer and look at other options. One option that is the most popular is a Remortgage.
It’s best to start by understanding what a remortgage is. This term is the act of paying off a pre-existing mortgage using a new mortgage. There is a range of options when taking out a Remortgage, some being more major than others.
Below is a quick guide that we compiled that includes all the options you could when it comes to taking out a Remortgage utilising the 20 years plus knowledge of our resident “Moneyman” Malcolm Davidson (host of our YouTube channel MoneymanTV).
So, your initial mortgage deal will usually last 2-5 years and include low fixed rates or possibly discounted rates. There might be a possibility that you will be placed on a tracker mortgage which means the interest rate will go off the Bank of Englands’ base rate.
If you aren’t on a tracker mortgage, you will likely be on the lenders Standard Variable Rate when your term ends. Also known as SVR, this is a mortgage with an interest rate that might change depending on how much the lender wants to charge. Unlike tracker mortgage, this will not follow the Bank of England’s base rate.
These can be seen as more expensive routes to take, which is why a lot of people may look at Remortgaging for better rates in order to potentially save money on their monthly repayments.
You might find yourself in a position where you are 2-5 years into occupying your home and feel something isn’t right. It might be that you need an extra room or bigger living space for your kids/belongings. It might be some form of renovation such as getting a kitchen, office or loft conversion. In this situation, many look into releasing their equity with a Remortgage to cover the costs instead of to moving into a larger house.
The option to release equity in order to fund/manage your own projects might seem quite intimidating especially when getting planning permissions, however, it can be seen as more rewarding and less stressful in comparison to finding your new home, selling your current one and moving your belongings.
Furthermore, funding towards home projects that could make the house look a lot more impressive and appealing can be beneficial if you will sell it up or rent it out in the future as the property could increase in value.
In some circumstances, many might look at getting a better mortgage term by reducing the length or switching to a more flexible product which is where they could Remortgage in Durham. The longer your term, the lower the payments will be over time. Therefore, reducing the length does mean you won’t be paying back your mortgage for as long so you aren’t exactly tied down forever, however, your monthly repayment will be a lot higher.
An option that provides benefits that can prove endearing to some homeowners is having a more flexible mortgage when they remortgage. This could give you the chance to overpay which could result in paying your mortgage off as quick as you’d like also being able to pass the same mortgage and rates over to another property, if you decide to move at any point in the future.
Although a flexible mortgage might sound perfect, it likely will come in the form of a tracker mortgage. As mentioned before, this mortgage follows the Bank of England base rate. This means that payments could fluctuate on a monthly basis depending on interest, therefore making them a little unreliable.
Equity is something that is in any property. The way the amount is worked out is through the difference between what is still owed on the mortgage and the current property value. Like we mentioned before, this equity can be used to fund home improvements, however, there are more options for you out there.
You may equity is used 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.
If you are a Buy to Let landlord, you might use the Equity Release as a way of covering your deposit for buying a future property for an addition to your portfolio.
Some people use Equity Release for paying off any unsecured debts that they have accrued over time.
Paying off unsecured debts may sound like a simple solution, Debt Consolidation not only bases both on the amount you’re owed and the value of the property but also on your credit rating. Therefore, it could mean you are limited in the amount you can borrow.
On top of this, you will need to borrow more than your outstanding mortgage amount in order to pay off your previous mortgage and your debts. Because of this, your monthly repayments will potentially be higher. This may not be the best situation to be in, you can be assured in knowing that there are some options out there should you find yourself in an unfortunate situation.
In the case where you have damaged credit, there are still options to choose from, however, these may be difficult and require very Specialist Remortgage Advice in Durham before proceeding. Be aware that this might not be guaranteed.
You should always get mortgage advice before choosing to consolidate and secure any debts against your home.
Getting in touch with an experienced and trusted Mortgage Broker in Durham would be very beneficial if you are reaching the end of your term and are exploring the options when it comes to Remortgaging.
With an advisor by your side, they can provide you with the support you need when looking into your circumstances and future goals so then you have the best route for you ready in the next step of your mortgage journey. We always aim for this process to be smoother and quicker than your first time.
Through our experience as a mortgage advisor in Durham, we have heard of our many clients’ different mortgage hurdles. Although these challenges are not entirely impossible to resolve, it’s vital to know that they can become a major factor in stalling the speed and flow of the process.
These challenges could include:
Divorce and separation can be hard to deal with and is very unfortunate. When this occurs, many divorced partners are then faced with more than just marriage challenges, with one of these being the joint financial endeavours that were taken out together.
An option that initially sounded endearing to many married couples, due to the fact it can allow them to achieve their goal quicker, can quickly turn sour in the event of a separation.
We tend to hear a handful of commonly asked questions from one half of the former happy couple when they get in touch. These include;
Considering the affordability of your mortgage payments is paramount. As well as having an expert Durham mortgage advisor, you need to ensure that you are fulfilling necessary income requirements that make the obstacle of divorce and separation easier to overcome.
In some cases, getting a new job comes with a greater income level than your previous job. However, a gap between going from your previous job to your new job can become a complication with your mortgage, and it’s especially the case for mortgage lenders.
If you are starting a new job, some lenders are always willing to factor in the new job either in the first month or as soon as you are about to start it. Furthermore, you will find periods of probation are acceptable.
When dealing with mortgage-related issues, we have found that the mortgage amount can change depending on if you are a family with children or not. A family with children, for example, will be offered much less compared to a family without children.
This is especially true in cases where the parents have just started back at work and are in the process of managing childcare, which are known for having notoriously high monthly costs. Many mortgage lenders will view these the same way they view other large monthly outgoings such as car payments.
It is best to mention, however, that a number of mortgage lenders operate in a different way. In some cases, lenders dismiss childcare-related expenses as part of the outgoing costs. This is due to the fact they strictly operate based on the data presented by the Office of National Statistics for outgoing costs. This can potentially increase the mortgage amount.
Anti-Money Laundering laws, put in place in the UK, tend to be quite strict. Because of this, it needs to be known where all funds deposited by the mortgage borrower are coming from. Evidence of the deposit source will be required by your mortgage broker and lender. Sometimes, it may even be required by estate agents and solicitors.
Due to this, the entire mortgage application becomes a lot more complicated. Regardless of the source of deposit (either gift, personal savings, property sale, premium bonds, or personal loans), there must be documents detailing how the funds were obtained.
Benefit income can have its challenges too! With the help of an expert mortgage broker, this can be easily tackled. In fact, all forms of benefit incomes can be taken into account from disability benefits to child tax credits, however, this depends on the views of the mortgage lender.
It doesn’t matter if you are a first time buyer in Durham, looking to move home in Durham, or looking to remortgage in Durham, challenges can come about and cause unnecessary stress. Get in touch with a mortgage broker like ourselves and we will try and help take the stress away.
Durhammoneyman has had more than 20 years of experience in the mortgage business. In this time, our heaps of experience and knowledge through the years have allowed us to help many different and unique customers get through difficult mortgage obstacles.
Therefore, no matter what personal situation you are in, we have probably encountered a similar one before. A few of our services include first-time buyers, remortgage, and self-employed mortgage advice in Durham.
Getting a mortgage can become complex if you are unsure of what you are doing. The reason for this is that there are thousands of different lenders with their own individual lending criteria, and it can be difficult to find the right one.
You’ll find that by instead opting to speak with a mortgage broker in Derby, you’ll be opened up to a wider variety of mortgage options, with criteria that your dedicated advisor will be able to match you up to.
Sometimes, you will find you can pass a lenders credit scoring system easier than you would from another, it all just depends on the lender. There are parts of the market that different lenders love to focus on, specific niche markets.
It’s common to find that the stricter the lending criteria are, the lower the supply rates are. The criteria can be stricter to match than others. Therefore, don’t feel disheartened if you are struggling to find a lender that will accept you.
It can be hard to qualify with lenders who have strict criteria. When a competitive deal has been offered to you, it will always have a tight margin. This is due to the fact that the lender needs to know the customer will be able to afford the mortgage and lenders want to make a profit off this and not lose money.
When it comes to high street lenders offering the cheapest rates, you will find they will always increase their earnings from their borrowers. As soon as a mortgage has been accepted, they will gain more profit by selling you more of their products. Some of the products include bank accounts, unsecured loans, credit cards, and Insurance.
A common occurrence that you may find with mortgages, is the lowest rate of interest often comes with expensive set-up costs. This is why people often stay away from these products. When a lender grants you a mortgage, the main thought they have will be about their profit.
On the contrary, a Mortgage Broker in Durham will always have your best interest. Our knowledgeable and caring team knows all the secrets to save both your time and your money. We will work hard to find the best deal available that fits your circumstances.
In some cases, not everyone can just remortgage somewhere else and this is due to many reasons:
Matching lenders’ criteria, depending on the current performance of the economy, can affect how easy or hard it is to get accepted a mortgage. If the economy is suffering, lenders will tighten the margins and vice versa when the economy is doing well. Depending on when you are applying, it can sometimes be hard to obtain a mortgage, yet previously, mid-2000’s, it was too easy. This was prior to the credit crunch where lenders were granting ridiculous mortgages to people who couldn’t afford one at all.
As well as matching the lender’s criteria, the current state of the economy is another factor that can affect your chances of being accepted for a mortgage. If the state of the economy isn’t doing well, lenders will tighten the margin and vice versa when the economy is performing well.
There are times when obtaining a mortgage can be difficult. It just depends on when you have applied for it, whereas, in the mid-2000s, it was too easy. Before the credit crunch, lenders were granting ridiculous mortgages to people who couldn’t afford one at all.
Lenders took a completely different view and tightened their criteria after the credit crunch. The requirements included a 25% deposit which meant getting on the property ladder was unattainable. This tempted customers into renting due to the brisk increase in interest rates.
We have become knowledgeable about what lenders are looking for in mortgage applicants through our valuable experience. Credit scoring is something many high street lenders now do to try and save time and money. Furthermore, this method gives the lender confidence in their ability to lend.
Speaking to a Mortgage Broker might be the best option if you are struggling to match the lender’s criteria. As a Mortgage Broker in Durham, we can provide you with options that we know will increase your chances of your mortgage application being successful.
With a range of simple ways to achieve this, giving us a call could bring up a step closer to securing a mortgage deal. Get in touch and speak to an experienced Mortgage Advisor in Durham and potentially start your journey on the property ladder.