A remortgage is where you take out a new mortgage to pay off and replace your existing mortgage. There are plenty of reasons to do so. Remortgaging will not always be the right decision for every homeowner but could be an effective way to achieve the next step in your home ownership goals.
We tend to find, homeowners usually set their rate for 2-5 years, enabling them to keep the same consistent interest rates for that period.
A homeowner will typically look to take out their remortgage towards the end of their fixed period. Here at Yorkmoneyman, we tend to contact our customers about 6 months earlier, so we can go through the background process, allowing a smooth transition when a mortgage ends and your new one starts.
It is important not to remortgage any earlier than this, to avoid any potential early repayment charges.
It is also important to understand the alternatives before considering remortgaging. For example, some homeowners may want to remortgage to create more space in their homes. Whilst this could be one option, other homeowners may simply look to move elsewhere.
Another option is doing a product transfer. While a remortgage usually takes out a mortgage with a new lender, a product transfer switches to a new deal with the same mortgage lender.
Finally, if you are above the age of 55 and own a property that is worth at least £70,000, you may have the possibility of taking out an Equity Release plan. We recommend you speak with a qualified later life mortgage advisor in York to see if this is the right option for you.
Ask for a personalized illustration to understand the characteristics and risks of a lifetime mortgage. A lifetime mortgage may impact the value of your estate and it could affect your entitlement to current and future means tested benefits. The loan plus accrued interest will be repayable upon death or moving into long term care.
That is why seeking remortgage advice in York might be a good option and speaking to a remortgage advisor in York can help in many ways. Below we listed some of the most popular reasons we hear why homeowners choose to remortgage.
One of the most common cases where a homeowner might want to remortgage their home is so that they can get a better mortgage term or mortgage deal.
When your introductory or fixed-period ends, you will switch onto your mortgage lenders Standard Variable Rate (SVR), which is typically a higher rate of interest and therefore more costly.
It is exceedingly rare that this will be a better option for you, so the vast majority will instead look to remortgage onto a much better deal. Using the equity that is in their property, they will have access to a lower loan to value deal, lowering their interest rates and overall costs.
If you prefer to pay off your mortgage quicker instead, you may also have the option of keeping your monthly mortgage payments the same, whilst reducing the overall length of your term. This will also possibly save you money, as you will be paying less interest overall.
Every home will have an amount of equity built up. This equity is the difference between the property’s value and the remaining mortgage balance. As the balance decreases, equity increases. If the value of the property increases, so does the equity too.
Homeowners may have the option to remortgage to release equity, to use for a variety of means. Here we listed some of the main reasons you may want to look into equity release in York.
Over time, you may need to make some necessary changes to your home, especially if you prefer to live there rather than move elsewhere. Our mortgage advisors in York often speak to customers who are looking for remortgage advice in York, to discuss their options to remortgage for home improvements.
These home improvements can be from a home extension to create some extra space, make some improvements to the existing rooms or completely remodel your kitchen, it can be a great option for homeowners to make these changes and sometimes adds value to your property.
Keep in mind that most mortgage lenders will want to see quotes for the work that is to be carried out if this option is something you are looking to do.
More important than ever before, a homeowner may want to spend now and save later by making energy-saving alterations.
The installation of solar panels has become popular for some as an energy source, as well as devices that can convert wind into energy. Insulating your walls, replacing doors and windows. These can be great options for those who want not only to be greener but also to save money.
Whilst a remortgage to consolidate debts can be a great option for some, it is not a decision to be made lightly, and we would recommend taking remortgage advice in York ahead of time.
Debt consolidation will typically see you combine your unsecured debts with your mortgage, into o a single manageable monthly outgoing. Although it will hopefully reduce your expenses, it will cost more overall on interest, as it will extend throughout your term.
You should think carefully and speak with a mortgage advisor in York before securing other debts against your home. By adding your unsecured debts to your mortgage, which is secured on your home, you are potentially putting your home at risk if you cannot make the required repayments.
Although the total monthly cost of servicing your debt may have reduced, the total cost of repayment may still have risen as the term of your mortgage is longer than it may have taken to repay the debts originally.
Other reasons why a homeowner may look to remortgage to release equity, to provide someone they know with a gifted deposit. This is more common with parents who will release part of their equity so that their child can get onto the ladder of the property.
This gifted deposit can be used as all or part of the deposit for a house that their child wants to buy. You will also have to sign a form stating that this is a gift, not a loan, and evidence of where the funds came from.
If you are heading towards the end of your fixed-period and are looking at remortgaging advice in York for either one of the options mentioned above, or even perhaps another reason altogether, please feel free to get in touch or book your free remortgage review to speak with one of our remortgage advisors in York today.
You will benefit from their expert remortgage advice in York. They will search thousands of remortgage deals to help you find the most suitable deal for what it is you are looking to achieve.
Rishi Sunak’s second Budget as Chancellor brought two pieces of welcome news for the property sector as the Government attempts to transform “Generation Rent” into “Generation Buy” to help stimulate the UK economy, namely the new 95% Mortgage Guarantee and an extension of the Stamp Duty Holiday.
The name of this scheme is misleading as not everyone that applies is guaranteed to be offered a mortgage, it is still subject to affordability and credit score. The “guarantee” itself is that the Government will ensure Lenders don’t stand a loss if they grant a 95% mortgage to a customer who then subsequently falls into arrears and is repossessed leaving behind negative equity.
This scheme should in theory give Lenders more confidence to lend even though the applicant only has a smaller deposit to put down. Of course, Lenders never want to repossess someone’s home unless it is the last resort, but if that happens then the new scheme would cover any shortfall.
Lenders have been worried about the prospect of home values decreasing so this measure should alleviate that concern although of course, the chances of negative equity occurring will naturally reduce should property prices increase as a result of these announcements!
The scheme is available to both 1st Time Buyers and Home Movers, it’s available on any property (not just new build) and will run until December 2022. Some major High Street Banks have already signed up to the scheme and it’s likely more will follow later on. It’s still a big challenge for Lenders to cope with the demand they are getting for mortgages due to the difficulties training and supervising staff working from home but they will want to offer as many of these mortgages as they can.
When the Stamp Duty Holiday was launched last year we all hoped life would be very much back to normal by the cut-off date of 31st March 2021 but things didn’t pan out that way as we know. Solicitors are struggling to keep up with the workload and if lots of chains had collapsed then it would have partly defeated the object of the exercise.
Therefore it was good to hear the scheme has been extended to 30th June for purchases up to £500,000 and 30th September for purchases up to £250,000.
The Government certainly sees the property sector as an area that can play a big part in our economic recovery and if you are looking to buy a home or remortgage this year please reach out and we will be happy to advise you.