Category: Remortgage

Following the initial mortgage application, the original mortgage terms will come to an end and then commonly homeowners seek to re-mortgage.

The benefits of re-mortgaging can be large savings as well as locking in preferred rates for another set period of time.

When re-mortgaging homeowners can search the wider mortgage market in order to find the best terms, or remain with their current provider, which may not result in the most competitive terms however can save on paperwork and time.

In this post, we will discuss the benefits and downfalls of re-mortgaging with the same lender, as well as cover the common terminology used within the re-mortgaging process and review the process itself of re-mortgaging with the same lender.

What is a Product Transfer?

The term product transfer is commonly used within the mortgage industry when a policyholder switches mortgage product with the same lender.

The terminology ‘remortgaging does not necessarily relate to the current provider, but more the process of switching to a new rate, mortgage term, loan amount or other different feature.

Depending on the current terms of a mortgage, there could be savings to be gained on interest rates by re-mortgaging however, typically other fees are applicable during a re-mortgage, such as valuation fees, arrangement fees and solicitor fees and therefore a full costing of the option should be undertaken before proceeding.

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Need more help? Check our quick help guides: 

• Reasons why a mortgage could be declined on affordability. 
• How reliable is a mortgage in principle?
• How do joint mortgages work?
• Can you get a mortgage on a fixed-term contract?

What are the Benefits of remaining with the Same Lender?

The main benefit of remortgaging with the same lender and simply switching mortgage product is that the process is much easier. Usually, the process involves a conversation regarding the products on offer and their associated rates of interest.

Once the product selection is made, the mortgage will switch over without the requirements of extra checks and some of the fees as incurred with a re-mortgage to a new lender.

Switching lenders requires a new mortgage application to be made, including meeting all of the eligibility criteria and affordability checks, as well as a property valuation and legal representation.

Another benefit of a product transfer is to avoid the common automatic switch to a standard variable interest rate which is likely to cost the homeowner more money in repayments and interest.

What are the Disadvantages of remaining with the Same Lender?

Although it is easier to stay with a current mortgage provider, there may be downsides of doing so as follows:

The wider mortgage market is not approached

It is highly likely that the current lender will only offer a small range of products for a product transfer and therefore to obtain the most competitive mortgage rates and terms, it is often beneficial to search the wider mortgage market in order to compare a range of products.

To put this in context the current lender may offer a handful of product transfer options, whereas if the wider mortgage was reviewed, there could be thousands of products to compare.

Related guides: 

• When was my house built? 
• Buying out a sibling from an inherited house 
• How long does it take to release mortgage funds? 
• Does a valuation mean that a mortgage is approved? 
• Mortgage lenders that accept benefits 
• Can I extend my interest-only mortgage term? 

Missed opportunity for a Property Valuation

It is common that when the property is first bought with a mortgage, that a full property valuation is carried out to evaluate both the price and condition of the property for the purposes of the mortgage lender.

The valuation of the property is critical when calculating the loan to value, or LTV ratio for the lender, which often is linked to the interest rate offered on the mortgage.

However, when a product switch takes place without the requirement of a property valuation, any inflation in the property price has not been captured, which can limit the level of borrowing potential available.

It would depend on the homeowner’s circumstances if this is a big deal, although usually if the property price has increased, the loan to value would decrease resulting in preferred interest rates being offered. Not all remortgages arrange a new valuation.

Affordability Improvements not being Captured

Often a couple of years would have passed since either the initial mortgage application or a previous re-mortgage and therefore the homeowner’s personal circumstances may have improved either by promotion at work or reduce expenses such as childcare costs ending, therefore improving the affordability.

Flexible Options

As briefly mentioned, when transferring mortgage product with the same lender, there may be limited mortgage options, whereas if a full market search and new mortgage application was made, there may be more flexible options available such as decreasing mortgage payments to increase the disposable income or, repaying a proportion of the mortgage off without incurring early repayment fees during a mortgage term.

Another option homeowners may wish to consider is borrowing more money during the process of re-mortgaging which wouldn’t usually be possible with a simple product transfer with the same lender although a further advance may be available with the current lender.

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Related guides: 

• Mortgage 5 times salary.
• Can you get a mortgage on land? 
• Refurbishment mortgages.
• Part and part mortgages.
• HMO mortgages.

What is the Difference Between Product Transfer and Porting?

The process of porting a mortgage occurs when a homeowner opts to move to a new house but there is the option of transferring the mortgage with the same lender to the new property. Not all lenders allow mortgage porting and therefore to find out more it is worth liaising with your current lender as soon as possible, to clarify if this is an option.

If porting is not an option, a new mortgage application will be required against the new property, incurring the associated fees with a new product as well as any early redemption fees if due.

Porting is therefore differing from a product transfer where the property and lender remain the same.

How long does a Remortgage Process Take with the Same Lender via Product Transfer?

The process of switching mortgage product with the same lender is typically very quick as no third parties are involved to complete extra checks.

Remortgaging with the Same Lender Summary

In this post, we have discussed the process and terminology used when transferring to another mortgage product with the same lender.

We have also explored the pros and cons of staying with the same lender, however, if you have any further questions or would like a full review of your personal circumstances including whether staying with the same mortgage lender is the most competitive option, please do get in touch to book an appointment with one of our team.

Call us today on 01925 906 210 or feel free to contact us. One of our advisors will be happy to talk through all of your options with you.

Further reading: 

• How much does the average mortgage cost?
• Modern method of auction 
• What mortgage can I get for £500? 
• Mortgages for discharged bankrupts

There could be many reasons behind a requirement for a cash injection, and depending on your circumstances, raising capital on your home may be the first port of call.

This article will explore some of the options available for raising capital against property including discussing all of the necessary considerations.

What is a Capital Raising Mortgage?

The process of raising capital against a property usually involves remortgaging.

By taking out a re-mortgage, a homeowner swaps or changes their mortgage product to either benefit from better terms such as lower interest rates, or to increase the borrowing to enable a cash lump sum to be released which can be for a range of purposes such as paying for home improvements or to consolidate other debts. To generate cash, equity is released from the property.

This type of borrowing is a secured loan which means the property could be at risk if the repayments are not kept up.

Each lender will have criteria of which reasons that they will be prepared to accept a capital raising mortgage for however typically such mortgages can be used to raise finances for the following:

• New purchases – The funds raised could be used to buy a new car, pay for a family event such as a wedding or funeral or put a deposit on another property.
• Gifts – Capital raising mortgages could be arranged to fund gifts, for example, to enable a family member to get on the housing ladder.
• Debt consolidation – Most lender will allow capital raising mortgages to be used for paying off other debts such as personal loans or credit cards. The process of debt consolidation can streamline payments and save on interest; however, the repayments are often over longer with a mortgage rather than a personal loan for example.
• Investments – The funds raised could be used to fund investments such as a business expansion or the purchase of a buy to let property for example.
• Home Improvements – Funds raised by re-mortgaging can be used to undertake an array of home improvements from re-decorating to extensions.

Most lenders will not be prepared to offer a capital raising mortgage for:

• For the purchase of stocks and shares
•  Funding a business start-up
• Repayment of debts escalated from gambling
• To repay tax bills

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Related reading: 

• Reasons for remortgaging.
• Remortgaging to release equity.
• Remortgaging to buy another property.
• Remortgaging with bad credit.
• Remortgaging for home improvements.
• I own my house outright can I remortgage? 
• Capital raising mortgages.

What is the process of remortgaging?

The re-mortgaging process is similar to that of applying for a standard mortgage, as the same information will be required to be reviewed by a lender such as:

• The financial position of the applicant, including a credit history check plus proof of current income and expenditure
• The value of the property that the proposed borrowing will be secured against

In addition, with a remortgage application, the lender will most likely request the purpose of the additional borrowing.

The underwriting process is also the same as with a standard mortgage, as following an application, the lender will review all of the information provided to check that the applicant and property meet the lending criteria.

A property valuation and survey will be undertaken during the application process and if the application is deemed successful, a mortgage offer can be issued.

How much can be borrowed when remortgaging?

Typically, capital raising re-mortgages will offer up to 75% of the property’s value, however, some lenders may be willing to increase their mortgage offer to 95% of the property’s value with a first charge mortgage.

A first charge mortgage is the first mortgage that has been charged against property and therefore would have the first priority before any other lending on the property.

First charge mortgages are common for residential borrowing however they can also apply to commercial property. Should any other lending be requested on a property, the first charge mortgage lender would need to grant permission.

There are a few mortgage lenders that may even offer 100% of the property’s value with a second charge.

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A second charge mortgage is technically where there are two separate mortgages in place against one property.

A second mortgage application can be made even if the applicant does not reside in the property and can be useful should the requirement to obtain additional borrowing comes at a time when the applicant would face large early repayment penalties on the first mortgage.

Another example of when a second charge mortgage may be suitable is when the first mortgage is already on preferable terms and therefore by re-mortgaging in the traditional way would cost more by paying higher interest across the whole borrowing amount.

As already discussed, the permission of the first mortgage lender would be required in order to set up a second mortgage.

As with any borrowing, the value of the mortgage offered may be tailored to the personal circumstances of the applicant and therefore the percentages discussed are often the maximum a lender would offer.

All mortgage lenders apply affordability factors, reviewing an applicant’s level of income and expenditure to ensure that the loan can be comfortably repaid.

Related quick help remortgage guides: 

• Remortaging on maternity leave 
• How soon can I remortgage?
• Shared ownership remortgages
• How long does it take to remortgage?
• How to remortgage for an extension

What are the costs of re-mortgaging?

There will be costs applicable to re-mortgaging such as mortgage application fees, arrangement fees, valuation fees and transaction fees, broker fees (if used) in addition to the interest payable.

Due to the potential costs, and the longevity of any mortgage decision, it is important to undertake sufficient research before applying for a re-mortgage, ensuring that it is the most cost-effective option to achieve the financial objective.

An independent mortgage adviser can help with the process of comparing different financial products, provide insight into the current market conditions including typical lending offers of certain lenders and ultimately find the best deal that suits the needs of the applicant.

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Capital raising mortgages summary

Re-mortgaging is a method of generating a cash lump sum for an array of purposes, however, there are a number of factors to consider when looking into a re-mortgage such as finding the most appropriate financial product, comparisons with other financial options, plus the costs involved and the affordability of the repayments.

An independent mortgage adviser can provide assistance with reviewing your personal circumstances and advising the most appropriate financial solution whilst comparing the financial products available to find the best deal.

Call us today on 01925 906 210 or feel free to contact us. One of our advisors will be happy to talk through all of your options with you.

For many people, a financial aim in life is to have paid off the mortgage against a property!

However, even when this objective is achieved, situations can occur that require the need to raise additional capital.

The type of mortgage or another borrowing financial product needed would depend on the reasons behind the requirement for a cash injection, as well as factors such as age and personal circumstances.

This article will explore the options available for raising capital against a mortgage-free property including discussing all of the necessary considerations.

What is Remortgaging?

The financial terminology ‘remortgage’ can have multiple meanings as follows:

• The first definition of a re-mortgage is to take out a loan against a property that is already owned outright.
• The other, more common reason for re-mortgaging is when a homeowner swap or changes their mortgage product either due to personal circumstances changing or by switching to a different mortgage (often with a different lender), to benefit from better terms such as lower interest rates.

Like all other borrowings a re-mortgage lender will review an applicant before making an offer of a mortgage, reviewing:

• The financial position of the applicant.
• The value of the property that the proposed borrowing will be secured against.

In addition, with a re-mortgage application where the homeowner owns the property outright, the lender will also be interested in the purpose of the additional borrowing.

Throughout this article we will be focusing on the first type of re-mortgage, where a homeowner has paid off the balance of their original mortgage, however, requires a cash injection for a range of reasons such as pay for home improvements, to consolidate other debts.

We will also discuss other reasons that a re-mortgage may be suitable, such as seeking to let out a property, which may not be permitted under current mortgage terms.

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Related reading: 

• Reasons for remortgaging.
• Remortgaging to release equity.
• Remortgaging to buy another property.
• Remortgaging with bad credit.
• Remortgaging for home improvements.
• I own my house outright can I remortgage? 
• Capital raising mortgages.

How much can I borrow when remortgaging?

The maximum values that a lender will typically loan via a re-mortgage will depend on two factors:

• The Loan to Value (LTV) is set by each lender, however typically the maximum LTV available is around 80%, meaning that a lender may offer to lend £80,000 for every £100,000 of value in an owned property. The value of the property will be the leading factor for calculating the maximum loan value and will be independently valued as part of the re-mortgaging process.
• The maximum loan offered will also depend on the personal circumstances of the applicant. All lenders apply affordability factors, reviewing an applicant’s level of income and expenditure to ensure that the loan can be comfortably repaid.

What are the costs of remortgaging?

There are costs applicable to re-mortgaging such as; application fees, arrangement fees, valuation fees and transaction fees, in addition to the interest payable.

Therefore, it is important to undertake sufficient research before applying for a re-mortgage, ensuring that it is the most cost-effective option to achieve the objective. A financial broker can help with the process of comparing different financial products that best suit the needs of the applicant.

What is the process of remortgaging?

The re-mortgaging process does not overly differ from that of applying for a standard mortgage as similar information is required to be reviewed by a lender, following which an underwriting process begins, ensuring that the applicant and property meet the lending criteria.

A property valuation and survey will be undertaken during the application process and if the application is deemed successful, a mortgage offer can be issued.

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Raising Funds to Consolidate Debts

One scenario we have briefly mentioned is where a homeowner owns their property outright but would like to raise funds to consolidate debts.

The main consideration for debt consolidation is securing the borrowing against an asset, for example, the property, as existing debts may not be secured. There is a benefit to secured borrowing as typically lower interest rates would be achieved, however, there is also the ultimate risk that if repayments are not kept up to date, the asset linked to the mortgage could be seized by the lender.

With any debt consolidation exercise, it is worth undertaking research into the fees involved to move the borrowing, ensuring that the transfer will save money. Re-mortgaging often will incur costs such as arrangement fees, valuation fees and bank transfer fees, therefore it is important to ensure that there will be an overall benefit before proceeding.

Any re-mortgage offer would be subject to meeting the lending criteria and therefore, before submitting an application it is important to check that the criteria and affordability checks will be met.

It is also worth noting that some lenders do not offer mortgages for debt consolidation, and therefore for advice on which lenders to approach, contact an independent financial advisor.

Buy to Let Mortgages

Should a homeowner own their property outright however they are interested in exploring the option of renting out their current property, meanwhile purchasing another property to live in, a buy to let mortgage may be suitable. A buy to let mortgage would enable capital to be raised from the owned property, whilst being an appropriate financial product for letting out.

There are many considerations when letting out the property such as health and safety requirements, energy efficiency legislation and insurance and therefore plenty of research is required into the costs and timescales of obtaining the necessary documentation before committing.

How does remortgaging differ from equity release?

A re-mortgage is a significantly different financial product from an equity release. With an equity release, the ownership of the property is altered and also there are different application criteria, such as age limits. Typically, an equity release product will only be available to those over 55 years old.

Equity release is the process of withdrawing some of the equity owned from property to generate a cash lump sum, a source of regular income or a combination of both.

With equity release, the homeowner can continue to live within the property either:

• Until the sale of the property,
• Until a move is required such as into a care home,
• Or until death.

Often the end of an equity release agreement is by the settlement of the capital plus interest payable following the sale of the property.

Equity release products can be appealing as there are no repayments due until the sale of the property, however, as with any financial decision, there are considerations and therefore it is highly recommended that independent legal advice is sought before making any commitments.

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Capital raising on property owned outright summary

Remortgaging can provide a way of generating a cash lump sum for an array of purposes, as long as the applicant meets the lenders borrowing criteria. There are a number of factors to consider when looking into re-mortgage such as sourcing the most appropriate financial product as well as the affordability of the repayments.

A financial adviser can provide assistance with reviewing your personal circumstances and advising the most appropriate financial solution whilst comparing the financial products available to find the best deal.

Call us today on 01925 906 210 or feel free to contact us. One of our advisors will be happy to talk through all of your options with you.

It’s a goal for many homeowners to have paid off the mortgage! However, even if a homeowner is lucky enough to be in this situation, sometimes scenarios can occur when additional cash flow is needed and therefore the option of obtaining a loan may be required.

Although a homeowner without a mortgage can be in a favourable financial position when seeking a loan due to the equity they have in the property, their circumstances may have changed since the original borrowing was paid off.

Therefore, lenders will need to review the entire circumstances of further borrowing requests before making an offer.

In this guide, we will discuss the options available for obtaining finance for a homeowner without a mortgage, including exploring re-mortgaging.

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I own my property outright, can I remortgage?

A re-mortgage can mean one of two things:

• Firstly, for the purpose that we have already discussed, to take out a loan against a property that is owned outright.
• Secondly, re-mortgaging commonly takes place when there is a change of mortgage lender to benefit from better terms such as a lower interest rate or to borrow additional funds if the existing lender cannot offer a further advance. A change of mortgage rate with your current lender is known as a product transfer.

Even in scenarios where a homeowner has paid off the balance of their mortgage, re-mortgaging is often an available option to generate a cash injection, as long as the applicant meets the eligibility and affordability criteria.

A re-mortgage may be sought after for a number of reasons such as to pay for home improvements, to consolidate other debts or to fund unexpected bills such as divorce settlements.

Like standard mortgage applications or other borrowing criteria, the lender will review an applicant before making an offer of a mortgage, analysing:

• The personal financial position of the applicant, including any other borrowing.
• The value of the property that the proposed borrowing will be secured against.

In addition, with a re-mortgage application where the homeowner owns the property outright, the lender will also ask the purpose of the additional borrowing.

Check Today's Best Rates >

Related reading: 

• Reasons for remortgaging.
• Remortgaging to release equity.
• Remortgaging to buy another property.
• Remortgaging with bad credit.
• Remortgaging for home improvements.
• I own my house outright can I remortgage? 
• Capital raising mortgages.

In addition to the interest payable on a re-mortgage, there can be other costs involved with re-mortgaging such as; application fees, arrangement fees, valuation fees and transaction fees.

Therefore, it is important that research is undertaken to ensure all the fees are known in advance of an application. A financial/mortgage broker can provide assistance in comparing financial products between lenders and their typical fees.

How much can I remortgage my house for?

The maximum values that can be borrowed via a remortgage will depend on two factors:

• Firstly, the Loan to Value (LTV) will be set by each lender, however typically the maximum LTV available is 80%, therefore a lender may offer £80,000 for every £100,000 of value in an owned property.
• Secondly, the personal circumstances of the applicant will heavily affect any re-mortgage offer. The lenders will apply affordability factors, reviewing the amount of income the applicant receives, taking into account payment of household bills and any other debts due.

How does re-mortgaging differ from equity release?

A re-mortgage is a significantly different product to an equity release financial product as with a re-mortgage, the ownership of the property is not affected (unless there is a repayment issue and repossession processes begin).

There are also different application criteria, such as age limits. Typically, an equity release product will only be available to those over 55 years old.

Equity release is the method of withdrawing some of the equity owned from property to generate a cash lump sum, a source of regular income or a combination of both.

Following the process of an equity release application, the homeowner can continue to reside in the property up either until the sale of the property, a move into a care home or death. Usually, repayment of the equity release (the capital plus interest) is repaid by selling the property.

Often there are no repayments due on the equity release until the sale of the property which can be appealing to many homeowners, especially those with low incomes, however, there can also be disadvantages with this type of financial decision and therefore it is highly recommended that independent legal advice is sought before making any decisions.

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How do I remortgage a property I owe outright?

As with the process for a standard mortgage, a re-mortgage application can be undertaken either directly with a lender, such as a high street lender or via a financial/mortgage broker.

The advantages of using a broker can be to search the wider market to find the best deal, while also receiving support and guidance throughout the process.

Whichever method a borrower chooses to approach a lender for, some organisation will be required in advance of an application being made to obtain the following details or documents:

• Details of the property.
• Proof of identity.
• Proof of income such as payslips and annual P60s.
• Evidence of affordability such as copies of bank statements.

A mortgage agreement in principle can usually be prepared by a lender once the above documents have been reviewed.

During the underwriting stage, a valuation or survey of the property will take place plus further background checks may commence on the applicant, ensuring that all of the details provided are correct.

Once the underwriting is complete, and the application is deemed successful, a mortgage offer can be issued.

Related quick help remortgage guides: 

• Remortaging on maternity leave 
• How soon can I remortgage?
• Shared ownership remortgages
• How long does it take to remortgage?
• How to remortgage for an extension

I own my house outright and want a loan summary

Re-mortgaging can provide a method of generating a cash injection for an array of purposes, as long as the applicant meets the lender’s borrowing criteria. The repayment of re-mortgage borrowing will need to be reviewed, ensuring that the additional outgoings do not alter the quality of life of the homeowner.

As briefly mentioned, there are alternatives to re-mortgaging available to homeowners such as equity release, however, there will be pros and cons for each option and therefore the advice and assistance from an independent financial adviser can be highly recommended.

A financial/mortgage adviser can assist with reviewing personal circumstances and advising the most appropriate financial solution as well as comparing the financial products available to source the best deal.

Call us today on 01925 906 210 or contact us. One of our advisors can talk through all of your options with you.

Reasons for remortgaging to buy additional property.

There are a number of popular reasons why people would want to remortgage their current residential home in order to purchase an additional property. These could be:

1. Raising money on your current property to be an investment property on a Buy to Let basis.
2. You may want to raise money to buy a Holiday Let, which again is an investment but differs from a Buy to Let as this is aimed at short-term letting for people to use as a holiday rental property.
3. You may fancy that holiday home by the sea and want to remortgage your current property to help you achieve that by way of a 2^nd residential mortgage.
4. You could remortgage your existing property for a Let to Buy purpose. This is where you would rent out your current home to purchase another property for yourself as your main residence.
5. You may want to remortgage your current residential property to buy a family member’s property for their use.

How do I go about remortgaging to buy another property?

The first step is to speak to us and get the best advice. This is something we help many customers with on a regular basis and will know the best route for you to go down depending on your individual circumstances and requirements.

We have access to over 90 lenders and each lender’s criteria can differ significantly so we want to ensure we place you with the right lender for you in order for you to be successful in remortgaging to buy another property.  For whatever your reason is.

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Things to consider?…

Equity

You will need to understand how much equity you have in your current property. In other words, the value of your current home is less any mortgage or secured loans you have against it. This is known as “LTV” (Loan to Value)

I am going to give you a realistic example…Let’s say your current residential property is valued at £350,000 and you have checked your balance on your existing mortgage and you owe £105,000. This equates to 30% LTV and the amount of equity you have in your home is £245,000.

We go through your individual circumstances and affordability checks and establish exactly what your reason is for the remortgage and then from our research, we find a lender for you that would be happy to remortgage you with a 90% mortgage of your current property.

Your new mortgage amount would be £315,000, your existing mortgage is cleared of £105,000 and you would then be left with £210,000 for your additional property purchase.

Rates being offered by a lender will usually lower the more equity you have in your property. You may therefore get a better rate in this example if you were to remortgage 80% of your current property.

Your new mortgage is £280,000, but this would then mean you had the lower amount of £175,000 remaining for your additional property purchase.

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Stamp Duty

We don’t want this to come as a nasty surprise when buying an additional property so we always ask you to check what your Stamp Duty Land Tax liability will be when considering purchasing a property, especially an additional property.

By doing this research at the early stage in the process may have an impact on the price of the property you are looking to buy as you may want to keep some of the money back to pay for such a cost.

For the most up-to-date information, we advise you to visit the Government website below. In addition to this, it is always worth checking what Stamp Duty Land Tax will be due with your conveyancing solicitor as this is paid to them upon completion so they can offer advice on what you will need to pay depending on the reasons for the additional property purchase.

https://www.tax.service.gov.uk/calculate-stamp-duty-land-tax/#/intro

As a guide please see the table below** This is correct at the time of printing but may be subject to change so please do not rely on this. Please check independently before committing to any property purchase as to what the stamp duty Land tax liability is for yourself and your individual reasons for the additional property purchase.

Property Price	Normal Rate	Additional Property Rate
Less than £125k	0%	3%*
Between £125k and £250k	2%	5%
Between £250k and £925k	5%	8%
Between £925k and £1.5m	10%	13%
Over £1.5m	12%	15%

*If you are purchasing an additional property that is less than £40k, this will not attract additional Stamp Duty Land Tax. For any purchases which are between £40k and £125k for an additional property, the Stamp Duty Land Tax would be 3% of the full purchase price.

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Related reading: 

• Reasons for remortgaging.
• Remortgaging to release equity.
• Remortgaging to buy another property.
• Remortgaging with bad credit.
• Remortgaging for home improvements.
• I own my house outright can I remortgage? 
• Capital raising mortgages.

Affordability and personal circumstances

These go hand in hand and a mortgage broker will do the very same checks whether you are a first-time buyer or if in fact, you are looking at remortgaging to buy additional property.

It is a regulatory requirement that we get from you all the information we need in order to give you the best advice possible.

This means we will go through your personal details, income, credit commitments, and monthly outgoings and also consider your overall creditworthiness.

Depending on the reason as to why you are looking to remortgage to buy an additional property, we may also need to consider future monthly costs that will come with owning that particular property.

The affordability checks would be different if you are remortgaging to purchase a Buy to Let Investment property as the lender, amongst other factors, will look at the rental income that the property being purchased is likely to achieve.

However, if you were remortgaging to buy yourself that lovely holiday home you would need to also cover the monthly running costs of both properties, so a lender is likely to include these to check you meet their lending criteria.

The bottom line for them is why are you remortgaging to purchase an additional property? Do you have enough equity in your current home to do this and are you able to afford it?

Ruban Selvanayagam from Property Solvers also adds that at other times, people look to remortgage to fund an auction or investment property. The lender may then want to know more about the specifics here.

We are here to check if you meet the criteria, find the best lender for you, and provide them with the evidence that will support your application.

Should you have any further questions about Remortgaging to buy an additional property, whatever the reason may be, please get in touch and we will do our best to help.

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Equity is the amount of your property you own outright. If you paid a deposit when taking out your mortgage, then your equity automatically amounts to that amount.

So, for example, if you paid a 5% deposit, then you have 5% equity. The remaining 95% is made up of your mortgage.

The more you pay off your mortgage, the more equity you will accumulate as the balance of the mortgage decreases.

Also, if the value of your property increases, so does your equity share.

There are numerous reasons why you might want to remortgage to release equity and this varies from person to person.

Some decide to remortgage to make home improvements, remortgage to buy new property, while others may want to use the money pay off other debts, and some even remortgage to give the money to their kids to put down a deposit on a property.

One thing you can be certain of is that the lender will always ask the reason for the remortgage.

How does remortgaging to release equity work?

The calculation to see how much equity you hold is simply subtracting your outstanding mortgage amount from the current market value of the property.

For example, if you purchase a house for £200,000 with a mortgage of £150,000 5 years ago.

In those 5 years, you have paid £20,000 off your mortgage, leaving it at £130,000.

If the value of your home has increased to £250,000 and the amount you owe on your mortgage has reduced this means you have increased equity.

Your equity was initially £50,000 but is now £120,000.

Remortgaging to release equity may prove difficult the less equity you have, and you may run into complications if you have had a change in personal circumstances since you applied for your initial mortgage.

However, for many, the process is straightforward.

• If you are remortgaging for the purpose of releasing funds, then your first step in the process is working out the loan to the value of your property. To do this you divide the loan amount by the current value of your property and multiply that number by 100.
• Your broker will start the application process by gathering all the information your lender will need and in turn, will submit your application.
• Many lenders offer a free valuation and free legal fees.
• On completion of the remortgage, the solicitor will pay the lender and any remaining money will be placed into your bank account.

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Can I borrow more than I need?

It is important when remortgaging to work out exactly how much you want to borrow.

If you want to borrow a bit more then usually it isn’t a problem if you meet the lender’s criteria and pass their eligibility assessments.

Most lenders will consider the following when reviewing your remortgage application:

• Your affordability (Income vs Outgoings)
• Reasons for borrowing

Your affordability has a major impact on additional borrowing. The lender will want to ensure that you can afford to repay what you borrow.

They will take other debts etc. into consideration when assessing your eligibility.

In most cases, to give a rough estimate of what you can borrow, the lender will take your income and multiply that by four.

Equity in this instance is your biggest asset. The more equity you have the more you may be able to borrow.

Remortgaging and borrowing a little extra is usually a good way to release some of the equity you have accrued over the years.

If you would like to discuss your affordability or just remortgaging in general, contact one of our advisors who will be only too happy to assist you with any queries you might have.

It’s a good idea to familiarise yourself with the costs of remortgaging, especially remortgaging with bad credit since you are likely to be offered a higher interest rate.

Remortgage or secured loan for additional borrowing?

Other options may be available to you, i.e a further advance with your existing lender or a secured loan as a remortgage it is not always the most cost effective.

Remortgaging isn’t the only solution to raise capital from your property.

Recommended article: Check out the main reasons for remortgaging.

Should I go for a remortgage or equity release?

This depends solely on what you want to get out of the remortgage. If you wanted to just take out a different mortgage on the property you currently own, then remortgaging is the way to go.

This can be as easy as swapping your mortgage to one with a better rate, sometimes even with the same lender (a product transfer). It is also possible to release equity by remortgaging.

However, if you are looking to swap lenders then please be aware that there can be early exit fees as part of the terms of your current mortgage.

Please check the terms and conditions of your mortgage before making any decisions.

It is always worth factoring in the cost of these added fees to ensure that the process doesn’t leave you in a detrimental position.

Related reading: 

• Reasons for remortgaging.
• Remortgaging to release equity.
• Remortgaging to buy another property.
• Remortgaging with bad credit.
• Remortgaging for home improvements.
• I own my house outright can I remortgage? 
• Capital raising mortgages.

Will I be eligible for remortgaging in order to release capital?

Most lenders have an eligibility assessment that they will carry out to determine if you are suitable to remortgage to release equity.

The assessment is often carried out based on the following factors:

• Credit history
• Employment status and Income
• The amount of equity you currently hold
• Type of property you have
• Your age

Contact us to discuss remortgaging to release equity in your home – our expert team of mortgage advisors will be able to provide more information and start your application.

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Yes! It is possible to remortgage to buy another property and quite often, this is the best reason to remortgage. Whether you want to buy to let or buy a second home, then remortgaging is for you.

All remortgage applications are assessed based on your individual circumstances and your affordability.

However, there are other elements that the lender will consider such as the purpose of the remortgage, type of property you are purchasing, how much equity you have in your current property and the loan to value ratio.

Not everyone will remortgage to buy a new home.

We have listed the most popular reasons for remortgaging to buy a second property below:

• Buying a holiday home – Purchasing a property for holidays, in addition to the one you already own
• Buying a holiday let – Buying a property to rent to holidaymakers on a short-term lease
• Invest in Commercial Property – Purchase property to use as a small business hub or office.
• Investing in a Buy to let – This helps you to release capital on your current property to buy a second property with the aim of renting it out
• Let to Buy – Renting your home in order to purchase another one
• Home improvements – maybe you want an extension or new roof?

How can I remortgage to buy another property?

When you apply for remortgage to purchase another property, lenders will carry out the same assessments and checks as they would if you were applying for any other mortgage.

Factors such as income, affordability, other debts, credit rating and loan to value will all be assessed.

However, lenders will also consider the reasons for your application at this point.

So, if you are remortgaging to purchase another property, then the lender will also consider this in their evaluation.

To discuss rates, fees and eligibility, contact one of our specialist advisers who are on hand to help you get the best deal available on the market to suit your needs.

It’s a good idea to familiarise yourself with the costs of remortgaging, especially remortgaging with bad credit since you are likely to be offered a higher interest rate.

How important is Equity when remortgaging to buy another property?

Equity is a very important factor in the lender’s assessment. Firstly, it is important that you know what equity you have in your existing home.

The calculation to see how much equity you hold is simply subtracting your outstanding mortgage amount from the current market value of the property.

If you have already paid off your mortgage in full and own your property outright then it is ‘unencumbered’.

There are mortgages available for customers with unencumbered properties.

Basically, lenders will lend against your equity in a remortgage so that is why it is such an important part of the process.

You cannot remortgage if you have no equity however, in some cases you can remortgage if you have a little equity. It may be more difficult to find a lender if you have a higher LTV.

If you only have a small amount of equity, you may pay higher rates.

The lower your LTV ratio, the more likely you are to qualify for the better rates and deals available on the market.

Related reading: 

• Reasons for remortgaging.
• Remortgaging to release equity.
• Remortgaging to buy another property.
• Remortgaging with bad credit.
• Remortgaging for home improvements.
• I own my house outright can I remortgage? 
• Capital raising mortgages.

How much can I borrow?

This depends on your affordability. If you want to remortgage in order to purchase a second property, then you must remember that you will be paying more than you are currently paying due to the fact that your new mortgage will be significantly larger than your current mortgage.

Your affordability has a major impact on borrowing. The lender will want to ensure that you can afford to repay what you borrow.

They will take other debts etc into consideration when assessing your eligibility.

In most cases, to give a rough estimate of what you can borrow, the lender will take your income and multiply that by four.

Please note that this is only an estimation. There are lenders out there who will lend in excess of four times the amount of your income.

To give an example:

You earn £25,000 a year and the lender is willing to lend you 4 times your salary

£25,000 x 4 = £100,000 Maximum Loan Amount

Some lenders will take bonuses or overtime into consideration which could see you eligible to borrow more.

If you would like to discuss your affordability or just remortgaging in general, contact one of our advisors who will be only too happy to assist you with any queries you might have.

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Can I remortgage to buy a second home if I have a poor credit history?

The answer to this question is yes, you can remortgage to buy a second property even if you have a less than perfect financial past.

However, there are certain things that the lender will need to know about your credit issues.

Whilst some credit issues weigh heavier on your credit report than others, it is worth mentioning here that the type of credit issue you have experienced may determine the success of your application.

Below is a list of issues that may make remortgaging to buy a second home a bit more difficult:

• Bankruptcy
• CCJs (County Court Judgments)
• Defaults
• DMPs (Debt Management Plans)
• History of mortgage arrears
• IVAs (Individual Voluntary Arrangements)
• Poor credit score
• Previous Repossession

Bankruptcy, for example, has a bigger impact than say a missed or late payment but all these things are carefully considered by the lender when reviewing your mortgage application. The length of time since the adverse credit issue will also determine how much of a risk you are to the lender.

For example, if your credit issues are older than 6 years then you may be seen as less of a risk. Adverse credit mortgages often carry higher interest rates, but this doesn’t necessarily mean that you won’t

qualify for a competitive deal. Lenders will also look at the amount of outstanding debt you have on credit cards or loans.

When the lender calculates your affordability, they consider the repayments you are making to your creditors when examining your outgoings.

If you have a high balance on a credit card for example, then it might be in your interest to reduce that amount before you apply for a remortgage.

For example:

You earn £25,000 a year but have credit card debt. The monthly repayment on those cards is £200. The lender will likely take these repayments into consideration when calculating how much they are willing to lend you.

If you feel that your poor credit history may hinder your chances of a remortgage, then do not hesitate in contacting a member of our expert panel to discuss your circumstances.

All of our advisors are professionally trained and have the expertise to answer any questions you may have about the remortgaging process.

Related quick help remortgage guides: 

• Remortaging on maternity leave 
• How soon can I remortgage?
• Shared ownership remortgages
• How long does it take to remortgage?
• How to remortgage for an extension

I have early repayment charges to pay on my current mortgage. Can I still remortgage to buy another property?

If you will be penalised financially for paying off your mortgage early, then you have to consider if it is better to pay the charges or stay in the mortgage until you will no longer incur a penalty for remortgaging.

Everyone’s circumstances are different, but our advisors can help you understand these charges better and assist you in weighing up your options.

A further advance or secured loan may be available to you.

Mortgaging for a Buy to Let Property

You can fund the purchase of another property through remortgaging and quite often people do so for the purpose of letting that property out to tenants. You may also be more beneficial to have a buy to let mortgage.

In this instance, lenders will look at your affordability based on the rental income you can achieve on the property.

In the past, lenders would calculate the mortgage based on rental income but with newly introduced guidelines, lenders have to consider other factors and carry out a more stringent assessment.

There are now minimum stress tests as well as changes in the amount of tax that has to be paid.

In addition to this, there are new procedures in places that impact how lenders approach applications from landlords who already have 4 or more buy to let properties.

In cases like this, the lender has to consider the landlord’s portfolio in its entirety in order to calculate the total income, LTV and earnings involved will all the properties as a whole.

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In order to carry out and pay for home improvements, many homeowners wish to release equity in their property by remortgaging.

The funds are then used to make improvements to the property inevitably, increasing the value of the estate.

This is just one of the many reasons for remortgaging, some other common reasons people remortgage their homes include releasing equity or to buy new property.

Is it a good idea to remortgage for home improvements?

All mortgage applications are assessed based on your individual circumstances.

It is at this point of assessment where the lender will tell you if a remortgage for home improvements is feasible.

For many, renovating their current property seems less of an expense and hassle than moving home.

For example, you may wish to add a bedroom to your property.

In this case, it would be more viable to build an extension than move to a home with an extra bedroom.

You also need to consider if there are any early repayment charges on your current mortgage.

Call us today on 01925 906 210 or contact us to speak to one of our friendly advisors.

Remortgaging to fund home improvements

What factors will be taken into consideration?

Lots of customers want to remortgage their property to fund home improvements whether it be an extension, renovations or a loft conversion.

The list of home improvements is vast and depends on what you want to get out of the remortgage.

There are a few things that are taken into consideration when you are remortgaging for home improvement.

We have listed a few below which we will explore in more detail:

• Affordability
• Cost of the Home Improvement
• Credit History
• Equity
• Financial Circumstances
• Type of Property

Affordability

You will have to prove to the lender that if you remortgage, you can afford the repayments.

The lender will consider all aspects of your financial position past and present. They will look at income vs expenditure including any other debts you may have.

The amount you can borrow totally depends on the lender’s criteria.

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There are some lenders on the market that are willing to lend more than others but this is dependant on your income and personal circumstances.

To give an example:

You earn £30,000 a year and the lender is willing to lend you 4 times your salary

£30,000 x 4 = £120,000 Maximum Loan Amount

Some lenders will take bonuses or overtime into consideration which could see you eligible to borrow more.

Cost of the Home Improvement

The lender will consider the cost of the home improvements in their assessment to give you an idea of the amount you will need to get from remortgaging.

There is a lot to consider when calculating the amount of money, you will need for home improvement.

These range from planning permission, builders, materials etc. It is sometimes best to anticipate that you will need a little extra in the event that an unforeseen cost should occur.

Once your lender approves the total cost needed from the remortgage, they will help you search for the best rates available on the remortgage market.

It is important that you make the remortgage work for you in a cost-effective way.

Example Scenario for Remortgaging for Home Improvements:

Your home is worth £300,000 and your current mortgage is for £150,000.

You want to build an extension onto your property that will cost £25,000.

When remortgaging, you can switch to a brand-new mortgage for £175,000.

This will pay off your current mortgage and leave you with the £25,000 you need for the home improvement.

Our experts will tell you that there are many things to consider before remortgaging as it may be more beneficial financially for you to do a further advance with your existing lender.

All options will be considered.

We take the hard work out of the process by considering the following for you:

• Is the home improvement viable?
• How much equity do you have in comparison to the amount you owe on your current mortgage?

Related quick help remortgage guides: 

• Remortaging on maternity leave 
• How soon can I remortgage?
• Shared ownership remortgages
• How long does it take to remortgage?
• How to remortgage for an extension

Your Credit History

If you have a poor financial history, there are specialist lenders on the market who deal specifically in mortgages for customers with adverse credit.

The age and type of your credit issues will have an impact on interest rates.

Another thing to factor into the process is the amount of outstanding debt you have on credit cards or loans.

Call us today on 01925 906 210 or contact us to speak to one of our friendly advisors.

When the lender calculates your affordability, they consider the repayments you are making to your creditors when examining your outgoings.

If you have a high balance on a credit card for example, then it might be in your interest to reduce that amount before you apply for a remortgage.

Get in touch with our expert advisors if you have adverse credit and are considering a remortgage for home improvements.

It’s a good idea to familiarise yourself with the costs of remortgaging, especially remortgaging with bad credit since you are likely to be offered a higher interest rate.

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Equity

The amount of equity you will have depends on how long you have owned your property.

You should accrue some equity if you have owned the property for a number of years, especially if the value of property in your area has increased.

This will mean you have even more equity to work with.

Personal Circumstances

Most lenders will consider the applicant’s age in their assessment.

The minimum age for most applicants is 18 and some lenders now don’t stipulate a maximum age.

This emphasises the importance of affordability however, the lender will want to make sure that whatever age you are, you can afford the repayments.

Types of home improvements that you may remortgage for:

Remortgage for an extension

A standard extension can cost anywhere in the excess of £30,000 so it isn’t unreasonable to remortgage to front the cost of the extension.

You may need planning permission, it is a good idea to check this with your local planning office before you begin any work.

Remortgage for loft conversion

Many people covert their lofts to create an extra room in their home.

This can be a bedroom or an office space. Either way, the cost can run into an excess of £15,000 at best.

Remortgaging to carry out a loft conversion is a great way to borrow the funds you need whilst maintaining a low-interest rate, depending on your lender.

Loft conversions may add value to your home so it is worth thinking about remortgaging after the conversion to avail of even lower rates as you will have more equity in your property.

Remortgaging for property renovation

It is possible to remortgage even if your property is in need of significant repair.

Ideally, your remortgage would enable you to carry out the necessary renovations to the property to bring it up to a standard considered habitable by the lender.

To be considered habitable, a property must have a functioning kitchen and bathroom as well as a sealed and secure roof.

It may be case that your property is already habitable, but you would just like to modernise it. Either way, you may be considered for a remortgage.

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You can run into issues with a renovation mortgage if, at the time of valuation, a serious problem is detected. This could be an issue with electrics or plumbing.

If this happens, the lender may ask for a retainer. Basically, the lender will agree to the mortgage but will hold the amount of money they think is required to fix the issue.

Once they are satisfied that you have made the necessary repairs, the rest of the money will be released.

Related reading: 

• Reasons for remortgaging.
• Remortgaging to release equity.
• Remortgaging to buy another property.
• Remortgaging with bad credit.
• Remortgaging for home improvements.
• I own my house outright can I remortgage? 
• Capital raising mortgages.

Should I remortgage after making the improvements or before?

If your improvements will add value to your property, then it might be a better idea to remortgage after the home improvements have been carried out should you need to release equity in the property.

You may also be eligible for lower interest rates if your loan is for a lesser amount of the value of the property.

Are there any alternatives to remortgaging for home improvements?

Yes, there is also the option of a secured loan. Put simply, a secured loan is a loan set against your current assets, i.e. your home.

This is a riskier option though and you must be aware that if you cannot keep up with the loan repayments, you might lose your home through repossession.

You really should weigh up the cost of the home improvements against the risk of potentially losing your home before making your decision.

It is also worth noting that if you do go down the secured loan route, that you have to make the repayments as well as your current mortgage payments.

Affordability and responsibility play a major role in a secured loan application.

You may also be eligible for a further advance with your current lender.

Related quick help remortgage guides: 

• Remortaging on maternity leave 
• How soon can I remortgage?
• Shared ownership remortgages
• How long does it take to remortgage?
• How to remortgage for an extension

Will I be able to afford a remortgage for home improvements?

This is entirely up to you. When you make your application for a remortgage for home improvements, the lender will heavily assess your affordability.

You need to be able to demonstrate that you can afford the repayments.

The amount that you can borrow based on your earning varies from lender to lender with some permitting 3 or 4 times your income and others permitting more.

Our aim is to find you the best remortgage deal available on the market if this is the best option for you. If you need a specialist lender, we can also help with that.

We want to secure the remortgage that is right for you and your circumstances.

Call us today on 01925 906 210 or contact us to speak to one of our friendly advisors.

What is an interest-only remortgage?

If you decide to remortgage an interest-only mortgage, then chances are you will be able to save some money if you switch to a better interest rate.

There are two usual scenarios for remortgaging an interest-only mortgage.

First is finding and switching to a better rate whilst retaining your interest-only agreement.

The alternative is switching completely from an interest-only mortgage to a repayment mortgage.

Repayment mortgages are the most popular mortgages presented by lenders these days.

It is worth noting that on an interest-only mortgage, you don’t make capital repayments on the amount you borrowed.

Instead, you are only paying off the interest. At the end of the lending term, the full amount that you initially borrowed is still payable.

It is for this reason that repayment mortgages are more popular with borrowers and lenders alike.

Recommended article: Check out the main reasons for remortgaging.

What is a repayment mortgage?

Put simply, with a repayment mortgage you repay the amount you borrowed over a number of years.

You make payments each month which are made up of capital repayment plus interest on the amount you borrowed to begin with.

The beauty of a repayment mortgage is that over time, the interest will reduce and your investment in the property will increase.

Are there any advantages to an interest-only mortgage?

The benefit of an interest-only mortgage is that the repayments are significantly lower than if you had a repayment mortgage.

This is attractive to many property investors.

However, whilst the lower payments may seem more attractive in the beginning, borrowers must have a plan to pay off the capital in full at the end of the lending term.

This is called an investment plan/vehicle.

For some people, this may involve putting the property on the market and selling up if no alternative method is available.

On the other hand, some investors have the misfortune of being left with a property in negative equity at the end of the borrowing term.

It may be possible to remortgage at the end of the preliminary rate period on an interest-only mortgage depending on certain criteria.

Many people opt for this as it is a means of raising money by borrowing against the value of the property.

Check Today's Best Rates >

Related quick help remortgage guides: 

• Remortaging on maternity leave 
• How soon can I remortgage?
• Shared ownership remortgages
• How long does it take to remortgage?
• How to remortgage for an extension

How do I repay an interest-only mortgage?

As mentioned before, an interest-only mortgage is just that, interest-only. No repayments are made on the capital.

The full amount borrowed at the beginning of the mortgage term is still owed and must be paid in full at the end of the mortgage term.

Some owners, mostly investors, rely on the sale of the property to repay the outstanding capital however others use savings or investments, even the sale of another property to settle the mortgage.

Most lenders will require a repayment strategy from you as proof of how you plan to gather the funds to clear the capital at the end of the mortgage term before agreeing to an interest-only mortgage.

You will have to prove to the lender that you have a repayment vehicle in place to pay back what you owe at the end of the mortgage term.

These repayment vehicles include:

• Stocks and shares ISA
• Endowment policies
• Investment bonds
• Pension schemes
• Stocks and shares
• The sale of another property
• Unit trusts

Each applicants’ circumstances are different and as a result, the lender may agree on alternative arrangements to those outlined above.

If you have any concerns about interest-only mortgages or have any concerns about your remortgage then please contact one of our specialist advisors who are on hand to answer any questions you may have.

It’s a good idea to familiarise yourself with the costs of remortgaging, especially remortgaging with bad credit since you are likely to be offered a higher interest rate.

Are the applications the same for interest-only remortgage and repayment remortgages?

An interest-only remortgage application is the same as a repayment mortgage application.

The only dissimilarity is that with an interest-only remortgage, you have to prove to the lender that you can repay the capital.

Some lenders will restrict what they lend you on a % LTV ratio. There are lenders on the market who no longer lend on an interest-only basis.

Related reading: 

• Reasons for remortgaging.
• Remortgaging to release equity.
• Remortgaging to buy another property.
• Remortgaging with bad credit.
• Remortgaging for home improvements.
• I own my house outright can I remortgage? 
• Capital raising mortgages.

Interest-only remortgage rates

As with any mortgage application, the rates you will be offered on an interest-only remortgage will depend on a number of factors:

• Affordability and income (Lenders will take your earnings into account when making their decision)
• Credit History (Poor credit history may limit your options with some lenders)
• LTV ratio
• Repayment vehicle
• The lender
• Property Type (non-standard builds such as studio flats, or ex council builds may require a specialist lender)

Your Age, Property, etc may also have an impact on the mortgage you will be offered.

There are many comparisons for the best interest rates available online but if you would like to discuss todays current rates, make an enquiry with one of our interest rate specialists.

Switching from an interest-only to repayment mortgage

You may find that one of your repayment’s vehicles (e.g ISA, endowment) isn’t performing as well as you had expected it to.

If this happens, all is not lost, you may be able to renegotiate on an existing mortgage or even switch from an interest-only to repayment.

This is very much dependent on the lender though. Granted, your monthly payments will be higher, but you will be paying off the mortgage monthly. This should lessen the lump sum you are left with at the end of the mortgage term.

You don’t have to stay with your current lender. You can easily switch if you prefer. This is the best option for some, especially if you want to make any changes to your current mortgage terms e.g. borrow more money, switch from interest-only to repayment or simply renegotiate on any of the terms of your current mortgage.

If you meet the eligibility criteria to refinance your interest-only mortgage with a new lender it might be the best option.

You may qualify for a better deal than what you have with your current provider. Get in touch with us today to find out if you could be benefitting from a better deal.

Are part repayment and part interest only an option?

There are many options available to individuals on the mortgage market today and fortunately, this is one of them.

It is possible to have a part repayment, part interest-only mortgage. This is known as a ‘part and part’ mortgage and is suitable for many applicants.

Reason being, you will be paying off some of the mortgage and some of the interest resulting in lower repayments than if you were in a repayment only mortgage and also less of a lump sum due back to the lender at the end of the term.

Interest-only mortgages for the Over 65’s

Age is most definitely a factor in the mortgage process. However, don’t let that put you off as there are also lenders that have specialist interest-only remortgage options.  Borrowing is such a large part of life now and as life expectancy increases, there are more senior clients hunting the market for interest-only deals.

If you are approaching or over the age of 65 and would like to find out if you are eligible for an interest-only remortgage, contact one of our experts who will be able to help establish the right deal for you.

What if I have been declined for an interest-only remortgage?

If your application for an interest-only remortgage has been declined or if you haven’t been able to refinance on your current mortgage, whatever the circumstances, you can always discuss your options with a member of our team who will help you find the best option available to you on the current market.

When you have a mortgage, you are often tied to a deal that only lasts for a finite period of time, such as 2 or 5 years.

This means that once the term is over you will be transferred to your lenders base interest rate, which could see your monthly payments skyrocket.

That is why it is so important that you consider remortgaging in time before your current deal is finished.

There will be costs to remortgaging, but if you choose the right deal from the right lender, you can save yourself thousands over the course of your mortgage.

This is why it’s one of the most common reasons for remortgaging, it can save you a lot of money, other common reasons include to release equity, for home improvements or to buy new property.

The Costs of Remortgaging

There are a number of fees that come with remortgaging, so it is important to determine if the money you will save will outweigh the costs.

A lower monthly payment may seem attractive, but it could cost you dearly if you haven’t factored in the costs of remortgaging. Let’s take a look at some of the common remortgaging fees.

Early Repayment Charges

You will have to pay early repayment charges to your current lender if you choose to leave your existing mortgage deal before it is up. It is important you determine how big this fee may be as it may completely eclipse any savings you may make with a new mortgage.

Repayment charges vary depending on the type of mortgage you are currently on and how long you have been on it. Generally speaking, the early repayment charge reduces with the length of time on the mortgage.

For example, with a five-year tracker, the early repayment charge could be 5% (of the outstanding mortgage debt) in the first year, decreasing by 1% each year of the deal.

If the sums are a little complicated for you to work out, speak to your mortgage broker who will be able to talk you through all the numbers in a way that is easy to understand.

Deeds Release /Exit Fee

The Deeds Release/Exit Fee is paid to your existing lender.  Not all lenders will charge a Deeds Release/Exit Fee, but if yours does, you can expect to up to £300.

Arrangement Fees

The arrangement fee is charged by your new lender to set up the new mortgage and is non-refundable if something goes wrong. This fee will vary between lenders and could be a fixed fee or a percentage of the loan amount.

Usually, the better the interest rate the higher the arrangement fee, so you should discuss with your mortgage advisor if a low-interest rate is worth the high fee.

You can pay the arrangement fee upfront to your new lender or you can add it the cost of your mortgage. It should be noted that if you add the fee onto your mortgage, you will be paying interest on it for the entire mortgage term. So, if you can pay it upfront, you will save yourself money in the long run.  Some lenders have fee-free products.

Related reading: 

• Reasons for remortgaging.
• Remortgaging to release equity.
• Remortgaging to buy another property.
• Remortgaging with bad credit.
• Remortgaging for home improvements.
• I own my house outright can I remortgage? 
• Capital raising mortgages.

Booking Fee
Also non-refundable, a booking fee is charged by some lenders to secure a good rate on your chosen remortgaging deal. This will be paid up-front to your new lender and is usually between £100 and £200.

Conveyancing Fee

Paid to your solicitor, the conveyancing fee covers the legal work required to transfer your mortgage from your old lender to your new lender. Your solicitor will also handle the payment of the outstanding debt to your existing lender.

Some remortgaging deals will include a free legal package, but in these cases, the lender chooses the solicitor and therefore you will not be guaranteed a swift and efficient service. The conveyancing fee usually comes in at around £300.

There may be additional conveyancing fees to be paid to your solicitor if you are remortgaging to buy out a partner or to add someone to the mortgage. Make sure you tell your solicitor this before they go ahead with the paperwork.

Valuation Fee

A valuation is required by a lender for security purposes so that they know that they can recoup their losses following repossession if you don’t keep up with the mortgage repayments. Many remortgage packages include a valuation for free, and unlike buying a new home, you won’t need to pay for a structural survey or a home buyer’s report.

If you are expected to pay for the valuation, the price will depend on the size and value of the property, but it usually costs between £200 and £400.

Mortgage Broker Fee

If you are remortgaging through a mortgage broker you may have to pay them a fee which can vary between a fixed fee or a percentage of the loan amount. A fixed fee is usually around the £300-£500 mark, but if you are paying your broker a percentage fee it can be quite expensive.

Just 1% of a £150,000 loan is £1,500.  If you have to pay your broker up-front and something goes wrong you will lose this money, so always ask if you can pay upon completion.

If you have bad credit, it’s still possible to secure a remortgage with bad credit, if you need assistance, don’t hesitate to contact us.

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How to Reduce the Cost of Remortgaging

There are a number of things you can do to keep the costs of remortgaging as low as possible, they include:

• Shop Around – Don’t just take the first deal that you come across. Take a look at mortgages from a number of lenders until you find the best deal. That is where a mortgage broker adds value as they will do this for you.
• Stick with your Current Lender – Speak with your existing lender as they may be able to offer you a great new mortgage deal, which will avoid the fees incurred when switching to a new lender.
• Boost Your Credit Rating – As with any mortgage, the better your credit rating, the better remortgage deals you will be offered. Obtain a copy of your credit report and learn more about your financial history to discover where you can make improvements.