Remortgage Archives - Beverleymoneyman

A Guide to Remortgages in Beverley: Top Reasons to Consider

Remortgage Broker in Beverley

At the end of your mortgage journey, you will have fully fulfilled your mortgage goals whether that be living in your dream home for you and your family, occupying a property that was perfect for you to get onto the property ladder but you are now wanting to leave in the future or a buy to let investment property.

Whatever path you took initially, you will eventually find that your fixed period is ending. You might be thinking of looking at the option of moving into a property that is either bigger or smaller. In some cases, a landlord may look to sell up their portfolio.

Through our experience as a Mortgage Broker in Beverley, we usually find that many people will look at taking out a remortgage.

What is a Remortgage?

Firstly, let’s look at the definition of a Remortgage in Beverley. In summary, a remortgage is when you use funds you have raised from taking out a new mortgage in order to pay off an existing mortgage in your name. There are many different options to do this and many benefits for each.

With over 20 years of experience in the mortgage industry the ‘Moneyman’ Malcolm Davidson (host of MoneymanTV, our YouTube channel), has collated a helpful guide to all the remortgage options that are fitting for homeowners.

Remortgage For Better Interest Rates

When it comes to your fixed period, this will usually be around 2-5 years. You may find that the fixed rates or potential discounted rates are usually lower. In some cases, homeowners might find themselves in a situation where they are placed onto a tracker mortgage, which will follow the inconsistent Bank of England’s base rate.

At the end of your fixed period, it’s likely that you will be placed onto the lenders Standard Variable Rate (also known as SVR). In short, an SVR is a mortgage with an interest rate and can completely change to whatever the lender wants to charge.

Even though this mortgage type does not fluctuate with the Bank of England’s base rate, a tracker mortgage would. Usually, the changes can happen when the base rate or the market changes. For instance, if the base rate increases, your lender may choose to increase their rate too.

Due to this, Standard Variable Rates are usually seen as a costly option to stay with, which can be one of the reasons why many homeowners generally go for a remortgage on their property for better rates. They do this in the hopes of having money down the line.

Remortgage for Home Improvements

If you have lived in your home for a couple of years, you may be looking at giving your home a makeover. Instead of finding a new place to live that covers your house preferences, you could have the option to remortgage in order to release equity. By doing this, you could use these funds to upgrade your current home.

Through our time as a Mortgage Broker in Beverley, we have customers do a range of things in their homes. One of the most common things is to get more space in their properties. Some are interested in giving their kitchen a revamp and one that has become popular is converting the loft into another room or something else.

For many homeowners, taking on a large project that involves lots of planning and managing and will include getting permission can seem like a nerve-wracking task. We have found that many customers find this option a lot less stressful and more rewarding than moving into a new house.

Making changes and developments to your home could be really beneficial down the line because you are creating more space and modernising a well-built home which, in turn, can increase the property’s worth. Therefore, if you do decide to move home, this could help you out.

Remortgage for Changes to Your Term

In some cases, homeowners do go down the route of taking out a remortgage in Beverley as a way to access better rates. This can be done by reducing the duration of your mortgage term or by switching to a more flexible product.

If you decide to reduce your mortgage term, you won’t be paying back, nor will you be restricted for as long. Therefore, you may find that the mortgage payments are higher for you. You would be paying less per month, the longer you have your mortgage term.

In many cases, customers decide to go for a more flexible mortgage term around remortgage time. You could have the option to overpay beyond the average amount (this usually comes with a cap), so you could pay off your mortgage quicker. If you decide to move, you could be able to pass the mortgage onto a new property.

This may be the best option, but these will usually come in the form of tracker mortgages. As seen before, this will correlate with the Bank of England’s base rate. This could result in your monthly payments being a bit unreliable, as they may change.

Remortgage to Release Equity

In the potential event of another momentous market crash, each homeowner will have a particular amount of equity existing within their home. This is usually calculated with the difference between what you will owe on the mortgage and the value of the property.

As previously stated, the common reason why people look at taking out a remortgage to release equity is so they can fund home improvements, however, you may have another reason to use the equity.

Other popular reasons include using the equity to cover long-term costs, as a way to provide an income boost, fund towards a large holiday, pay off an interest-only mortgage or to just to have extra disposable income.

Our team do work with Buy-to-Let landlords who will look at remortgaging to release equity from one of the properties in their portfolio and a way to cover the deposit for a future purchase.

Remortgage to Consolidate Debt

We have found that some homeowners look to remortgage to release equity in order to pay off any built-up, unsecured debts.

These may seem like a simple solution to debts, but it all depends on the amount you can borrow for a debt consolidation remortgage which does depend on the amount you owe a creditor, the value of your home and the current state of your credit rating. Because of these factors, you could be limited in the amount you are able to borrow.

On top of this, to pay your previous mortgage off entirely, along with the debts you have built up, you will need to borrow more than you actually require for a mortgage. Therefore, this will most likely mean higher monthly payments.

This is not the best situation, however, you will rest assured in knowing that if you are struggling, there are options out there that you can take.

For those who have a damaged credit rating, there are some routes for you to take. This would be a complex case though which is why you will need to seek Specialist Remortgage Advice in Beverley prior to proceeding with it. Be aware, that this doesn’t guarantee you a mortgage.

We do recommend that you obtain the advice of a Specialist Mortgage Advisor in Beverley before they consolidate any debts against their home.

Book Your Free Remortgage Review with a Mortgage Advisor in Beverley

Towards the end of your initial fixed period, you may be looking into the options and routes you could take. This is where a Remortgage in Beverley can help.

To connect with an expert Mortgage Advisor in Beverley, book your free remortgage review today. We provide a helpful, tailored service with availability 7 days a week from early in the morning until late at night. This means you can book your appointment around your schedule.

Your designated Mortgage Advisor in Beverley will be able to go through your case and get to know your mortgage goals to build a suitable option for your mortgage journey. Our team work hard in making the process as fast as it was your last process.

Agreement in Principle and Soft Credit Searches

Mortgage Advice in Beverley

More and more people these days pay much closer attention to their credit rating, especially First Time Buyers as they tend to worry about being accepted. Consumer awareness of credit scoring is higher now than ever before. We’d say at least half of the people who contact us for the first time, have already looked at their credit report online.

There are many different credit reference agencies out there. Most people will have heard of Experian or Equifax, but we recommend potential new clients to use Check My File for a 30-day free trial, which is £14.99 a month thereafter and can be cancelled at any time. This is because of this report “sweeps” several of those reference agencies and collates the information into an easily understandable colour-coded report.

Often, clients ask if we will be doing a credit search on them, because they are aware that too many searches can have an adverse effect on their credit score. Lenders always run credit checks but we always seek a client’s permission before doing so. There are 2 different types of credit searches that Banks can run on a customer: hard searches or soft ones.

What is a hard credit search?

A hard credit search is an in-depth look at your credit report. Any financial institution carrying out one of these should seek your permission to do so. The advantage of a “hard” search is the lender is looking into your situation quite closely. If you pass the credit score then it’s fairly likely that your application will ultimately be successful. The only thing that can really go wrong from then on, is if for some reason you cannot provide satisfactory documentation to back up the information you have disclosed. Either that, or it turns out you have provided false details.

The bad news about a hard search though is that it leaves a “footprint” on your credit file. This means anyone who looks at your report in the future can see you have had a search carried out. This isn’t necessarily a bad thing, but if you have several footprints registered in a short period of time then it could look like you applying for lots of credit at the same time.

The footprint does not state whether your application was successful or not. However, if you have several searches over a few weeks, then lenders’ systems could wrongly assume you are being declined on the basis of; “Why else would you go to lender number 2 unless lender number 1 had said no?”.

The odd hard footprint on your record from time to time is no big deal. There’s no need to worry too much about this, just be careful not to have too many.

What is a soft credit search?

A soft credit search is a “lighter touch” look at your financial situation. This is the kind of search that would routinely be carried out on price comparison websites. This would give you an indication of what products might be available to you. It can also be useful if someone wants to verify your identity.

Some mortgage lenders do soft searches in the first instance. More and more lenders seem to be changing to doing this type of search. Whilst the financial institution doing a soft search obtains less information about you than if they had done a hard search, an agreement in principle from one of these lenders is usually still an extremely strong signal that your full application will be accepted.

You will be able to see that someone has carried out a soft search on you if you check your credit file. The good news though, is that these searches are not visible to other financial institutions like banks. This means that you can apply for an agreement in principle for a mortgage, without it damaging your credit score. This is irrespective of whether it is successful or not.

If you are wanting to make an offer on a property, we always think it is an excellent idea to have your mortgage agreement in principle in place prior to contacting the estate agent. You want to give yourselves the best possible chance of securing the property you want at the lowest price so if you can present yourselves as having your finances in place then you are definitely putting yourself in a stronger position. Having the agreement in principle also sometimes puts the agent off trying to “cross-sell” their own in-house mortgage services to you.

Product Transfer V Remortgage Advice in Beverley

What is a product transfer?

When your introductory mortgage deal comes to an end your mortgage lender may offer you a new deal to stay with them, this is known as a product transfer.

Are you rewarded for being loyal?

Unfortunately, lenders do not always reward your loyalty and the offer they make you may not be competitive with deals you could get elsewhere. Even more annoyingly, these product transfer rates are not as good as the deal they offer new customers either!

Tempted by an online switch?

Whilst swapping to a new deal with your current lender may well be fairly easy online, it is always in your interest to see what other deals you may be eligible for. Lenders will also tempt you to effect a new deal online without taking advice.

This can be really dangerous because if you do this without advice you are waving goodbye to all the valuable consumer protection you would otherwise have benefitted from.

You’ll be opting out of advice

We have seen numerous examples of customers affecting these “follow-on” deals and locking themselves into an inappropriate deal. Because of this, they have basically opted out of advice, waving a lot of their rights in terms of making a complaint.

We once had a case where a customer who was pregnant did this and was declined for a small further advance to fund some necessary home improvements a few months later. She then had to pay a hefty early repayment charge to swap to a new lender who would grant her the additional funds.

Always get Mortgage Advice in Beverley

If we think a product transfer is the most suitable deal for you we will recommend that as a course of action for you and if we arrange the mortgage for you as a mortgage broker then all the regulation and consumer protection will apply.

In short, even if your requirement seems straightforward we recommend you always take advice – a second opinion costs nothing and making a mistake when taking a new product can be costly.

The Remortgage market is highly competitive and savings can generally be made by searching the market for a new deal.

Is Your Interest Only Mortgage Ending?

Mortgage Advice in Beverley

The Financial Conduct Authority does not regulate some types of buy to let or commercial mortgages.

Thousands of interest only mortgages are maturing every year and lots of mortgage-holders are not prepared to repay the capital sum owed. Here we examine how this situation has occurred and what can be done.

What is an interest only mortgage?

Interest only mortgages remain popular amongst buy to let applicants who buy up properties for extra income, but in the 80’s and 90’s most residential mortgages were set up this way. The idea was that you would only pay back the interest on the money you owed and you would pay back the capital lump sum at the end of the term.

When you took out an interest-only mortgage you may also have been advised to set up a repayment vehicle such as a low-cost endowment policy. The policy would then mature and was designed to repay the capital balance in full whilst also providing life cover through the term.

Unfortunately, many people weren’t made aware of the risks attached to these products, in particular, that there was no guarantee the policy would mature for a sufficient amount to repay the mortgage debt and this led to many applicants being compensated for being mis sold to.

Why have people still got these mortgages?

It’s unlikely that you will have taken out an interest-only residential mortgage in the last few years as they are fairly difficult to get unless you can prove a robust strategy for paying back the capital. If you took out an interest-only mortgage in the late ’80s or ’90s and have not switched it to a capital repayment then it could be maturing soon and action needs to be taken.

What can be done?

If you have found yourself in this position it is highly likely that your mortgage lender will have been writing to you asking how you intend to repay the capital. It’s vital that you keep the line of communication fully open with them, they will not want to take your property into possession and will only do so as a last resort.

Here are some of the options you can consider:

  • Ask your lender to convert to a repayment mortgage
  • Sell your property and consider downsizing
  • Use savings/other investments to repay the outstanding balance
  • Remortgage to a new lender
  • Consider a Retirement Mortgage

The retirement mortgage market has become seemingly popular, largely due to the number of interest only mortgage reaching cessation with no repayment plan in place.

There are far more retirement products available these days and some providers let you service the interest element by way of regular monthly payments.

This means that when you die the capital balance is repaid from the house sale and the surplus passes to your family.

Can I still get an interest only mortgage?

Interest only mortgage still have their place, for example, you may have a portfolio of properties or other investments in place to repay the money you have borrowed. Lenders will now want to examine your strategy for repaying the loan much more deeply than they did in the past to ensure they are not left with a mortgage on their books which could default.

They will want a big deposit to go down, possibly as much as 50%. They will also want to “sense-check” your plans, for example, will you have enough equity in your home to be able to down-size to a reasonable property at a later date.

Confused About the Help to Buy Schemes?

Whilst it is widely accepted that there is a national housing shortage, the government has launched several schemes over the years. These have been under the “Help to Buy” banner, designed to get people onto the property ladder.

Unfortunately calling all the schemes Help to Buy has caused confusion amongst consumers! Here’s a look at what’s out there right now.

Schemes Currently Available

Help to Buy Equity Loan

This is the most popular scheme and is available on new build properties only. You will have seen houses being built all around Hull and Beverley. The government will lend you up to 20% of the purchase price. Usually, my customers put down a 5% deposit and take out a 75% mortgage for the rest. Remember, it’s a loan not a gift and the government have a stake in your new home until you pay them back.

Forces Help to Buy

If you’re in the armed forces, you can borrow up to 50% of your salary, up to a maximum of £25,000 interest-free towards a new home.

Some FAQs about the Help to Buy Schemes

What if I’m Self Employed?

If you’re Self Employed in Beverley, there are still a lot of options available to you. It’s a good idea to get hold of your Accountant and speak to a mortgage broker in Beverley for mortgage advice.

Do I have to buy a new build house?

Yes and no, the Help to Buy Equity Loan is for new build properties only. The Forces Help to Buy can be a new or old property.

Do you need a good credit rating?

There may be options available to you even if you have a poor credit score. Mortgage lenders are becoming increasingly competitive on criteria and many challenger banks are entering the market. Again, please seek mortgage advice from a reliable mortgage expert!

How much deposit do I need?

A minimum of 5% as a rule.

Can my deposit be gifted by my parents?

Yes, family members and sometimes friends can gift (not a loan). This is a popular way for First Time Buyers to get on the property ladder. It’s also popular for home movers moving to a bigger home. In a recent Government Survey, 27% of such buyers relied on family and friends to help with a deposit.

Do I need to pay the government back?

Yes, with the Help to Buy Equity Scheme the government loan is interest-free for 5 years. After this, you’ll pay fees. Hopefully, the property will have increased in value and you can potentially remortgage the property at any time. This likely would be to raise funds to increase your share. Remember, the government will also receive their share of any profit made.

Is Help to Buy just for First Time Buyers?

The Help to Buy Equity Loan and the Forces Help to Buy Scheme are for both First Time Buyers in Beverley and Home Movers in Beverley. However, the Help to Buy Equity Loan is designed specifically for those who have never owned a property.

How do I use the Help to Buy Scheme?

The first stage would be to have a free mortgage consultation. This is to work out your maximum borrowing and also to get a mortgage agreement in principle certificate. This puts you in a strong position to make an offer. Once you have this in place you’ll be a “Qualified Buyer”, the next step is to go and view houses!

For more information and further terms and conditions about any of the above schemes please refer to the https://www.ownyourhome.gov.uk/ website.

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