Although the mortgage journey can sometimes seem quite stressful, in the long run, it can be extremely rewarding. You’ll go down one of two paths on your mortgage journey; one is that you find the property of your dreams that you can see yourself living in for the foreseeable future and two is that you buy your first home to get yourself onto the property ladder and keep going up until you find a home that suits you best.
Whichever path you choose to take, you will always find yourself coming to the end of your mortgage term. At this point, you are going to have to decide whether you want to remortgage or move home.
Another option could be to buy another property as well as keeping your current one and let it out as a let to buy. Also, this can work in the opposite way if you want to purchase a property as a Buy to Let.
A Remortgage is simply using the funding for a new mortgage to pay off your current mortgage. The term ‘Remortgage’ is very vague, it covers a lot of ground. You can actually Remortgage for lots of different reasons and in this mortgage guide, we are going to cover the most common reasons to why people Remortgage.
When you take out a mortgage product, its term will usually be somewhere between 2-5 years. There are lots of different types of mortgages, some being more popular than others. Their rate will vary depending on the product that you take out. For example, a Tracker mortgage will follow the Bank of England’s base rate; this rate will fluctuate depending on the economy and how it’s performing; whereas a Fixed-Rate mortgage will have set monthly payments that will never change until your fixed-term has ended.
So, you have a mortgage product that is perfect for you, however, your mortgage term is ending in 3 months time – what do you do?
– Firstly, you should check whether you can access a better rate or not. Occasionally, if from the point of when you took out your mortgage product you had a lower credit score than you do now, you may be able to get a better deal. To find this out for free, you should get in touch with a Mortgage Broker in York like ourselves. We will review your mortgage and your options to see whether or not you can access a better product.
– Secondly, once you find out about the options that are available to you, it’s your choice whether you want to renew your current deal or Remortgage/transfer products through your same lender.
If you don’t Remortgage, you will fall straight onto your lender’s standard variable rate of interest once your mortgage term has ended. Their standard rate is likely to come with higher costs than your current mortgage deal; that’s why you should always Remortgage! Ideally, you want to begin the process 3 months prior to your product ending.
You may be able to save money in places you didn’t think you could by remortgaging!
If you feel like you’ve found your dream home and have no plans on Moving Home in York, you have an option to Remortgage for home improvements. Home improvements can mean anything from a loft conversion to a garden extension – it can be anything you could class as improvements for your home.
In the middle of the coronavirus pandemic in 2020, we received enquiries left, right and centre about Remortgaging for home improvements such as a home office, gym, new kitchen and even bars. We think that everyone’s mentality was the same at the time. This investment has not only provided more living and breathing space inside of the property, but has also risen the property’s value.
When you Remortgage for home improvements, you will be adding more to your total monthly mortgage payments as your total mortgage amount will increase to incorporate the costs for the home improvements. So, at first it may seem like it’s costing you more each month, however, in the long run you may find that the home improvements massively increase your property’s overall value.
You can also Remortgage in York to find yourself a better mortgage term. Homeowners often do this to reduce their term or gain more flexibility with their payments.
Doing this can result in you having a shorter period of time to pay back your mortgage, which means that you won’t be tied down for a large portion of your life. Yes, this will increase your mortgage payments, but it will allow you to finish your mortgage quicker than before you decreased your term. The longer your mortgage term is, the less your mortgage payments will be, and vice versa.
Once you’ve got that mortgage payment history associated with your name and your lender knows that you are a reliable customer, they may allow for flexibility with your mortgage term. Doing this can sometimes allow you to overpay your mortgage.
It’s likely that you’ll have some amount of equity within your home, even if it is only a little. You can work out the amount of equity that you have in your home by taking the difference between how much is still owed on your mortgage and the current value of your property.
You can release some of this equity and turn it into a lump sum of cash. This money can be spent however you want as it is your equity; for example, you may want to use it for home improvements, to put down a deposit on another property, to pay off a car loan or to go on holiday – remember, it’s up to you!
Some people, usually older homeowners, will release equity in the form of a Lifetime Mortgage. You can find out more about this in our Equity Release in York article.
If you have built up any unsecured debts in your past, did you know that in some cases you can incorporate these into your mortgage through remortgaging?
It may not be the easiest of tasks to consolidate your debts into your mortgage. Before allowing you to do so, lenders will look at how much money you owe, the value of your property and what your credit rating is like.
Lenders will always be very careful when it comes to letting applicants consolidate debts into their mortgage. One reason for this is that your monthly mortgage payments will be increased; they will question whether they think you’ll be able to manage the extra costs of consolidating your debts. Another reason for this is that if you fall into arrears and your house ends up being repossessed, all of these debts have been secured within the property, which may make the lenders get no profit from the property.
Before consolidating your debts into your mortgage, we always recommend that you speak to an expert Mortgage Advisor in York – particularly a debt consolidation professional.
If you are approaching the end of your fixed-mortgage term and you are thinking about Remortgaging for a specific reason, even if it isn’t one of these, you should get in touch with our team. We offer a free remortgage consultation/review to every customer in York, so we advise that you take advantage of this if you are thinking of Remortgaging.
You will get to speak with your own dedicated Mortgage Advisor in York, who will guide you through the whole remortgage process, trying to find the perfect deal for you and your personal and financial circumstances.