You never know what to expect from the mortgage process. Sometimes it can be unpredictable and stressful, however, in other situations, it can be simple and easy-going. Taking out a mortgage is a huge financial commitment, for example, you’ll need to keep on top of your payments and know when your fixed-term is ending.
Fixed mortgage term lengths will vary depending on the product that you take out. Usually, mortgages will come in 2-year, 3-year or 5-year fixed terms. In some cases, depending on the individual’s circumstances, it may be better to take out a product with an even longer fixed term, such as 7 or 10 years. When you come to the end of your fixed term, you will need to take out a new deal, as your current one has ended, this is when it’s time to remortgage.
In some cases, you may be able to remortgage early, although, in doing so, you may have to pay a large fee (early repayment charge) for switching early.
A Remortgage is taking out another mortgage product to replace your current one. This can also be known as a product transfer, however, the main difference is that a remortgage involves taking out a different lender’s product and a product transfer is where you take out a new product with the same lender.
It sounds simple when you put it like that. On the other hand, when it comes to remortgaging/transferring products, there are lots of different deals and rates available, meaning that you may need to do a lot of looking around so that you can find the right deal for you.
People may also want to remortgage for different reasons; you can remortgage to find a better rate, improve your home, consolidate debts and many more reasons.
Typically, an average fixed mortgage term lasts between 2 and 5 years. During this time, you will be paying off some capital as well as interest, therefore, when it comes to your remortgage 2-5 years later, you could find yourself in a lower loan-to-value bracket which could allow you to access better rates.
This is why people choose to remortgage, because if they don’t, they may risk falling onto their lender’s standard variable rate of interest (SVR), which could be much higher than your current one. If they remortgage before this happens and manage to find a better rate due to fitting into a better loan-to-value bracket, they may end up saving money each month.
If you’re on a tracker mortgage, you will find that your monthly payments and your interest rate are dependant on the Bank of England’s base rate. Their base rate will change with the economy’s performance, for example, if the economy is bad, base rates may lower, and vice versa. Lenders will also add an extra percentage onto this base rate so that you’re usually tracking a rate between 2-4%. Tracker mortgages will work similarly to your lender’s SVR mortgages.
If you feel like your current home could do with some improvements, such as a new extension or conversion, through the power of remortgaging, there’s a possibility that you could get this work done.
Firstly, you’ll have to get an estimation of the costs of the improvements. Once you get an idea of how much it’s going to cost, you could be able to incorporate these costs into your mortgage upon taking out a new product. Although your overall monthly payments may slightly increase, out of it, you’ll get a brand new kitchen extension, loft conversion, etc.
Rather than going through the process of moving home in Doncaster and having to sell and buy a property at the same time, it can prove easier to improve your current home. If you are a growing family, want to add value to your home or just want to give your home a fresh look, we would recommend looking into remortgaging for home improvements.
In some cases, an applicant may want to extend or shorten their whole term to try and switch to a more flexible product.
If you shorten your term, it will mean that you pay off your mortgage a lot quicker. However, a shorter term can also mean higher repayments. Extending your term can reduce your payments but also mean that you’ll be paying off your mortgage for longer.
At the point of remortgage, this is where you can decide whether you want to extend your term or not. If you choose to shorten your term, you may also be given the option to overpay, which can help you pay off your mortgage quicker.
Even though a flexible mortgage product sounds like a great idea, they usually come in the form of a tracker mortgage. A tracker mortgage tracks the Bank of England’s base rate of interest, and this interest rate can change depending on how the economy is performing. This means that your payments each month could change, as when the interest rates change, it can affect your payments.
The longer that you’ve owned a property, the more equity you’re likely to have in it. Equity is the difference between what is still owed on the mortgage and the current value of the property. In some cases, you’ll be able to remortgage and release some of this equity to turn it into a lump sum of cash.
You can spend this cash however you want to. You could put down another deposit on another home, buy a new car or even pay for a wedding with it – it’s your money!
As a Mortgage Broker in Doncaster, we often see that Buy to Let landlords release equity in order to put down a deposit onto another property to expand their portfolio.
Equity release can also come in the form of a lifetime mortgage. A lifetime mortgage is aimed at older homeowners looking to take a large lump sum out of their home.
If you’ve built up some unsecured debt and want to incorporate it into your mortgage, in some cases, this can be made possible. It is recommended that you speak with an expert Mortgage Advisor in Doncaster, as debt consolidation is a complex and tricky subject.
It can get complicated as debt consolidation is not only based on how much you owe and your property value, your credit rating also matters. You also have to consider that you’re trying to incorporate large sums into your mortgage, therefore, your total mortgage amount will increase. This will also increase your monthly mortgage payments.
If you have bad credit, and you need help from a mortgage expert, don’t hesitate to contact us. We have debt consolidation experts at Doncastermoneyman that will be happy to help you with your needs.
If you are coming towards the end of your fixed mortgage term, it may be time to start your remortgage journey. We would advise that if you are within 6 months of your deal ending, it may be time to start looking around for deals. If you aren’t quite ready for that stage yet, we can take that stress away and do it for you!
Book your own free remortgage appointment online today. We have advisors who are experts in giving Remortgage Advice in Doncaster, and they are available 7 days a week. It’s our job to help you through your process and try and find you a perfect deal that matches your personal and financial situation.