The mortgage journey can be pretty rewarding in the long run. Though you might have faced several hurdles along the process, you are now at the end of your trip and now faced with making a decision. Call the property a home and settle down as a single homeowner or start a family, whereas others use this as a stepping stone to climb higher onto the property ladder or investment to help provide you with a boost in income.
Whichever pathway you choose, eventually, you will be approaching the end of your mortgage term and may find yourself in the position to sell up and upsize/downsize into a new property. You may even be in the market for selling your portfolio to the tenant(s); whatever the scenario, everything mentioned above all comes under one word ‘Remortgage’.
a Remortgage is where you take out a new mortgage on a property you already own to replace your existing mortgage or borrow money against your property value. There are many reasons people choose to remortgage, but one of the most popular scenarios is to Remortgage to find a better interest rate and save money.
By utilising over 20 years of knowledge working in the mortgage industry, Director of Sheffieldmoneyman and Mortgage Advisor Malcolm Davidson is here to talk to you about all the opportunities for starting your Remortgage journey.
The mortgage deal you start with will generally last somewhere within 2-5 years, featuring lower fixed rates or possibly discounted rates. We have seen in some cases where some lender may even put you on a tracker mortgage, a mortgage type that follows the Bank of England’s base rate.
When you reach the end part of your mortgage term, you will likely get placed on the lenders Standard Variable Rate (SVR). An SVR’s purpose is to increase or decrease this mortgage interest rate, depending on what the lender determines correct to charge you.
Be aware that this type of mortgage does not follow the Bank of England’s base rate like a tracker mortgage would do. As such, it can be a little more of a gamble, as the lender is not legally obligated to charge the amount that gets recommended.
Generally speaking, this type of Standard Variable Rates can be a more expensive route to take, so another look at their options to Remortgage for better rates. Potentially saving the homeowner with some money on their monthly repayments.
Once you’ve gotten through most of your initial term, you may feel like you need a extra room or a larger living space.
Some people choose to go down the route for a new kitchen, a new office, or even a loft conversion (which seem pretty popular these days).
Though the idea of obtaining planning permission from a local authority and both funding and managing your project can be a daunting task. Some may argue it’s a lot less stressful and more rewarding than the process of house hunting, selling your property and move out.
As time passes by, this may prove even more to be a wise investment choice, as creating more space and having good quality craftsmanship will likely increase how much your home is worth. This is very useful if you ever decide to sell up or rent your house out to someone else.
In some cases, some homeowners may wish to Remortgage in Sheffield to find themselves a better mortgage term, whether that be by reducing the length of the period in question or by switching to a more flexible product.
Doing this will mean you will be paying back your mortgage over a shorter amount of time so that you won’t be tied down for a large portion of your life. However, this route will also mean that your monthly repayments will be higher than they otherwise would’ve been. The general rule of thumb is that the longer your term, the lower the payments will be over time.
Many homeowners choose for their mortgage term to be a little more flexible when they take out a remortgage. It’s the benefits provided by this option that tend to sway homeowners more in its favour. Through this, you may gain the ability to overpay your mortgage.
This means you can pay your mortgage off quicker, as well as being able to carry the same mortgage and rates over to another property of your choosing, just in case you ever decide to find a new property at any point in the future.
Though a flexible mortgage sounds like it would be ideal for you, it will usually come in the form of a tracker mortgage. As discussed earlier, these mortgage types follow the Bank of England base rate. This means your payments could fluctuate based on interest, potentially making them a little unreliable when your monthly payments come around.
Every homeowner has some amount of equity in their home. How much exactly depends on factors. You can work it out by calculating the difference between what is still owed on the mortgage and the current amount your property is valued.
As mentioned earlier, equity can be used for home improvements, though that’s not all you’re limited to when it comes to using your equity. Some use their released equity to cover long-term care costs, supplement their income, have a holiday, pay off an interest-only mortgage, or have extra money to spend freely and treat themselves.
In the rare case, we find that Buy-to-Let landlords will use Equity Release as a means of covering their deposit for additional property portfolio purchases.
Another big one that works in conjunction with Equity Release is releasing funds to pay off any unsecured debts that may have built up over time.
Though it may seem like a reasonably straightforward task, Debt Consolidation not only bases the amount on how much you’re owed and the value of the property, but it also factors in where your credit rating is currently at.
This could mean that whilst you may be able to use some money to cover these costs, you’re limited from the offset regarding how much they’ll even let you borrow.
To pay off your previous mortgage and your debts, you will need to borrow more than the mortgage amount that is remaining on your balance. Additionally, this will almost certainly mean that your monthly repayments will be higher than they were previously. Though not an ideal situation to find yourself in, you can at least rest assured that should you find yourself in need of a backup plan, and you do have some mortgage options to choose from.
If you happen to have a damaged credit rating, you may also still have a chance to obtain a mortgage, though this process will not be easy and requires very Specialist Remortgage Advice in Sheffield before you can even proceed. Even with a professional by your side, there is still no guarantee that this will even be something you can do.
When choosing to consolidate and secure any debts against your home, please always seek Mortgage Advice in Sheffield first.
If you are at the end of your term and are looking at your home-owning and remortgage options, then don’t hesitate to Get in Touch with an open and honest mortgage broker in Sheffield today and our advisors, we’ll see how they could help.
A dedicated mortgage advisor in Sheffield will be able to discuss your circumstances and the best plan of action on your mortgage journey. Our aim as a mortgage broker in Sheffield to ensure a quicker and more straightforward process than your first mortgage.