18 Apr Remortgage your property in order get better terms or access some equity
Remortgage your property in order get better terms or access some equity
Nowadays, it’s not uncommon for people to remortgage their property in order get better terms or access some equity. It can be like searching around on the internet looking at different energy rates and broadband contracts; however, there are much greater consequences if you choose incorrectly – this why seeking professional advice before making any decisions about your finances should always come first!
Your mortgage is a big commitment, but you don’t need to stay with the same provider or existing lender forever. These days, it’s easier and quicker than ever before for people looking at refinancing their home.
Whether you’re looking for a specific remortgage deal or need help exploring your options and figuring out the best way forward financially, MDFS mortgage brokers are here to get it done. They’ll find what’s right for your family in no time at all with their expert brokers sorting through all things mortgage-related quickly so that everything can be taken care of.
Reasons to remortgage
Times change, and so do mortgage rates! Therefore, many homeowners decide to move from their existing lender at the end of a fixed rate agreement.
It’s well worth shopping around for the best deals. It might be possible to save hundreds if not thousands of pounds in interest.
Switching to a better mortgage deal
It’s important to check whether your existing provider can offer similar, if not better terms when compared with a quote from elsewhere. Sometimes it works out far better for customers to stick with the same lender even after they’ve investigated moving banks or building societies because fees may be lower now – especially those who are fee free!
Changing Mortgage Repayment Methods
Remortgaging to take advantage of affordable rates is not the only reason. You could switch from an interest-only mortgage to a repayment mortgage and start building equity in your property. Or to a mortgage where overpayments are allowed, working towards the dream of being free from debt.
Remortgage for debt consolidation
A remortgage is a wonderful way to raise capital for paying off debts elsewhere. You may be able to get a lump sum of money through remortgaging, which you can then use to clear all your debts and get your finances back on track.
Homeowners whose circumstances change unexpectedly and who need access to funds, but don’t want to pay credit card companies’ or other loan lenders’ significantly higher interest rates, may find this option particularly attractive. It is often cheaper to get a loan secured against a property than one arranged elsewhere. While remortgaging can be a short-term solution to clear or consolidate debts, it is not advisable overall. Other debt consolidation options are available. We recommend that you speak to one of our qualified mortgage advisors if you feel your finances are spiralling out of control.
You will need to prove that you can afford the new loan to qualify for this type of remortgage. In addition, you must have enough equity in your home. Currently, lenders are willing to consider a maximum loan to value of 90%.
To learn more about debt consolidation mortgages, please book an appointment. Or call MDFS today and our team will examine your finances and help you determine the best course of action based on your lifestyle goals and outgoings.
Remortgaging for home improvements
Remortgaging is also popular for raising capital to spend on an extension to your home, a conversion project, or other major improvements or repairs. You might be able to fund your dream home with one of our mortgage deals!
The amount you are eligible for will also depend on how much equity you have built up in your home as well as the amount you can afford to repay every month towards the new mortgage.
Remortgaging is usually done prior to carrying out the project, but in some instances, it makes sense to wait until the project is complete before doing so. As an example, if you increase the value of your property and reduce your loan-to-value (LTV) as a result, you should in theory be able to access more equity. Moreover, you may find more competitive rates since you will have access to a broader product range.
For home improvement projects, there are other ways to borrow substantial amounts of cash. A personal secured loan backed by your property, but separate from your mortgage, could be a viable alternative to remortgaging. There is also the option of an unsecured loan, but you may have to pay a higher rate of interest.
You will need to work out exactly how much your home improvements are going to cost and decide whether the benefits will outweigh the initial outlay. Don’t forget to consider architects’ fees, builders’ fees, materials, and the cost of obtaining building permits and performing building regulations inspections.
There might be reasons why you need some extra cash that we haven’t discussed here.
Imagine giving a considerable sum of money to a family member, planning your child’s wedding, or taking that once-in-a-lifetime trip you’ve always wanted.
Your options for releasing equity are practically unlimited. If you wish to settle school fees or pay an outstanding tax bill with the released funds, you may have to approach a more specialist lender. Even so, equity release remortgaging isn’t impossible. Please contact our team at MDFS Mortgages if you’d like to find a mortgage provider that can be more flexible than other mainstream banks. Contact us today for more information.
Purchase of another property with a remortgage
A remortgage may be an option for you if you’re looking to buy a second home. If you have sufficient equity in your existing home to make the arrangement feasible.
To find out more about remortgaging to buy another residential property or a buy-to-let investment, contact one of our advisors. They will be able to source you a great remortgaging deal and a favourable BTL loan rate.
If I remortgage, when can I do it?
The fact is you can remortgage your home whenever you want. It is important to remember, however, that some lenders will require you to remain on the existing mortgage for at least six months before allowing you to switch. Remortgaging merely for the sake of it is also not prudent, as the process is normally expensive, as we’ll discuss later.
Fixed rate mortgages normally last for two, three, five, and in some cases ten years. Once your fixed rate mortgage term expires, you will be placed on the standard variable rate (SVR) offered by your mortgage provider, which tends to result in higher interest rates. You will need to apply for your new mortgage, and be accepted into it, well before the end of your existing term, to avoid overpaying.
As a result, we recommend contacting one of our mortgage brokers approximately 3 months before your current agreement expires for remortgaging advice. Our team will have at least 12 weeks to find the right product, contact the lender with your application, and make sure everything is ready in time.
Remortgaging: how it works
Remortgaging begins with an Agreement in Principle, much like applying for a new mortgage. Your lender will use it to determine how much you can borrow.
To find the right deal, you will have to research the entire market. You will need to determine all the costs incurred in switching once you have chosen the right mortgage – often with the help of a remortgaging specialist. You will need to pay an application fee, commonly known as an arrangement fee, a valuation fee, which confirms how much your property is worth for mortgage purposes, and a solicitor’s fee to ensure the transfer goes smoothly.
If you are planning to exit your agreement or pay off the balance of your mortgage early, make sure you ask the lender if there are any costs involved.
To apply, you’ll need to provide documents and detailed information about your personal and financial background, as well as the details of your existing mortgage. For the lender to determine whether you have provided accurate information about your financial status, they will conduct a credit check. At this point, you will be notified if there are any issues with your credit file that could affect your application.
A valuation will be done on your property.
A solicitor or conveyancer manages the transfer of your mortgage, and your new mortgage will kick in as soon as your previous mortgage ends, so long as there are no unexpected bumps in the road. You should contact us 3 months before your current fixed rate ends to avoid time spent on the SVR.
What is the cost of remortgaging?
Customers who remortgage their homes for the first time are unaware of the costs involved.
Be prepared to pay the conveyancing fee, which can range from £300 to £1,000, as well as the Land Registry fee, which is anywhere from £20 to £900; searches; and an official copy of the title. Set aside some cash to make sure you can pay off the conveyancing and associated fees upfront, since you cannot usually add them to your mortgage.
You may also be charged early exit or early repayment fees, depending on the terms of your current mortgage. For a complete breakdown on your remortgage costs, contact MDFS Mortgages. We will provide you with the figures you need free of charge when you contact one of our financial advisors.
Where can I find the best remortgage rates?
Various online tools can help you compare the rates offered by mainstream and specialist lenders. The sites are helpful if you are looking for general information about the products you might qualify for.
However, unless you contact the lenders directly for more information or a quote, you won’t know if you meet their criteria. You can easily get swayed by an unbelievably low interest rate but remember that this is not the only indicator that a product will be a good fit for you down the road.
To obtain an accurate picture of what the remortgage deal can offer you, factor in remortgaging fees, exit fees, early repayment terms, and lender incentives. You might also be surprised to learn that many of the best remortgaging deals aren’t advertised directly to consumers on these comparison platforms.
Our experienced mortgage brokers are an excellent resource for finding the best remortgaging rates and mortgage deals, as they will be able to search the entire market on your behalf and find an exclusive deal with much more favourable terms than you had imagined.
We can help you find the right remortgage deal.
Contact the advisors here at MDFS Mortgages and let them help you with your remortgage application. If you’re eligible for a remortgage, we’ll be able to tell you which type of deal is best for your circumstances, where to find the most competitive rates and terms, and whether you qualify for one that beats your current deal. We work with a broader range of providers and can connect you with providers who offer more flexible lending than some of the big names.
Our access to exclusive products means that we can often save you money on your remortgage compared to if you went directly to your preferred lender. Now is the time to schedule your free, no-obligation consultation. If you’re worried that work will interfere with your mortgage search, we even offer evening and weekend hours.
Our advisers are all regulated by the FCA.