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.
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.
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.
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.
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.
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.
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.
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.
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.
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.
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.
The two most common questions we are asked on a daily basis are, “Can I get a mortgage in my situation?” and “How much can I borrow?”. In this article, we explain the latter which has changed quite a lot in the past decade.
Back in the ’80s and ’90s, most mortgage applications were manually underwritten. That is to say, there was lots of “human intervention” in the process of approving mortgage applications. You’d make an appointment with your Building Society Manager, and they would interview you.
They would encourage you to save with them for a while until you prove yourself credit-worthy. The manager would then grant you the equivalent of an agreement in principle. This would then be followed by advice on how much they were prepared to lend.
This sounds very much like a highly personalised process with a common-sense approach. That being said, it could lead to inconsistent decision-making. The manager has the discretion to interpret the lending manual. In other words, it would be possible to approach the same Building Society in a different town or city. You could possibly obtain a different outcome.
With a view to eradicating the above and more importantly, cut costs, Lenders moved to automated affordability calculations. “Caps” were applied so they would lend you more than, say, 3 or 4 times your household income.
As the 2000s progressed, lenders were becoming more and more generous in how much they would lend. Some lenders would offer self-certified mortgages. This was where no background checks would be carried out as regards how much an applicant actually was earning!
The market crashed and to all intents and purposes, 2008-2010 were very difficult years if you were trying to get on the property ladder. The lenders battened down the hatches and created a very cautious (over-corrected) lending environment.
The market recovered and in 2014 the regulator launched the Mortgage Market Review (MMR). This was a new set of guidelines for Lenders to adhere to. Gone were the old-style income multipliers which took little account of household expenditure. Before 2014, two applicants earning the same could borrow roughly the same as each other.
This was irrespective of how much they spent each month. Then came new affordability models. These took a much more forensic view of how mortgage applicants managed their money on a monthly basis.
There is still a “cap” in place (most Lenders will not go past 4.75 times your annual income) but your spending habits are analysed also. So, for example, if you have high childcare costs, lots of credit commitments and a student loan you will be offered less than your work-colleague who doesn’t have any of that expenditure.
We are still constantly surprised by the large variances lender to lender in how much (or little) they will lend. Some lenders seem to penalise low-earners (perhaps they are not looking for that type of applicant), some take pension contributions as a fixed outgoing so would often lend, say a public sector worker with a big pension deduction less than a private sector and so on.
It really is horses for courses and if you need to maximise your borrowing capability to obtain the home you need to buy then you’ll definitely need a Mortgage Broker in Beverley on your side who can research the market on your behalf to see if anyone will lend you the amount you need.
It’s very likely that you will be asked what your credit score is like when it comes to applying for a mortgage. There are a plethora of factors that can affect your credit score. For instance, the fewer addresses you have on your record, the better your credit score.
As mentioned, fewer addresses on your file can support your mortgage application when done correctly.
We do find that many applicants, particularly First Time Buyers in Beverley, leave their previous addresses on their records. They may have done this accidentally or as a way to keep their credit score from lowering but they do need updating.
There is a range of documents you will need to update whether it be bank statements, credit cards and electoral roll information. We do find that many applicants disregard this information as they believe it won’t harm their credit score, however, it can create a significant amount of damage.
You may be in a situation where you get an unpaid ticket that is sent through to your old address. If you don’t let the post office know to make sure all mail gets forwarded, the longer it goes unnoticed which can result in receiving a CCJ.
Receiving a CCJ on your credit file could result in losing lots of points on your credit file. This will damage your credit history and make things more difficult for you when it comes to being successful in your mortgage application.
We do recommend that you give your application a thorough check from start to finish. Begin with your address by making sure that the address on all of your accounts (credit cards / current accounts) and electoral roll are all registered to your current address.
This is usually targeted at applicants who are currently living in rented accommodation and haven’t changed their address from their previous property.
It’s best you double-check everything when applying for a mortgage just in case you miss anything. Keep on top of your address, making sure everything is updated can make a positive impact on your mortgage application.
Find out the exact date you moved into your rented apartment / new home and when you moved out. This will prevent any cross-over that may show you were living in two different addresses at once.
If you don’t do this could lead to confusing the lender and could potentially cause damage to your credit file or mortgage application.
It will be very beneficial to have a Mortgage Broker in Beverley to provide a helping hand as they will make sure your application is perfect before it’s submitted. They will also check that all information is updated correctly to have the best possible chance of being accepted.
Demonstrate to the lender that you tried your best to get your application accepted. You may have evidenced your deposit to show how you have saved up or you have consciously updated your address. Either way, it will massively help your application and impress them.
In the situation when you have an outdated address that is connected to one of your accounts, your lender will see that you didn’t check to see if any of your addresses needed updating. This could show to a lender that you haven’t taken things seriously.
To conclude, it’s important to change your address and any other factors stated above in order to prove to the lender that you are serious about this financial commitment. Therefore, we do strongly suggest that you check up on your file to make sure your application is up to date. If you are wanting a second set of eyes on your application, take advantage of our free mortgage appointment in Beverley.
Here at Beverleymoneyman, we have a team of expert Moving Home Mortgage Advisors in Beverley who are available 7 days a week. We look forward to helping you secure a great mortgage deal and get your application looking ready to go!