Can I Remortgage and Extend The Term? | Birminghammoneyman

Can I Remortgage and Extend The Term in Birmingham? 

There are many different reasons why a homeowner may look to remortgage in Birmingham. You can find a lot of information about this on our website by navigating to the remortgage guide’s section.

There are plenty of options out there for homeowners, whether you are looking to remortgage to release equity or remortgage for home improvements. A particular option that does not get bought up much into a conversation is you can remortgage in Birmingham to extend the length of your mortgage term.

Why would I remortgage in Birmingham to extend my term? 

Your term is how long you must pay back your mortgage, based on the contract you signed with a mortgage lender. Popular choices are usually about 25-30 years, which is a long time to be financially responsible for something, although it also provides long-term security.

There might come a time when maintaining your payments might be difficult. For example, if your bills have risen, taking out a remortgage to extend your term can help spread the cost of your mortgage over a longer term. Reducing your monthly mortgage repayments.

This, in turn, can release much more disposable income than you can use per month. However, the downside is that your interest will also be spread over this extended mortgage term.

Meaning that whilst giving you that extra disposable monthly income will be cheaper in the short term, by the time your term has finished. you will have spent more on your mortgage.

Can I remortgage in Birmingham to extend my term if I’m borrowing more money?

Yes, you may be able to extend your term if you want to borrow additional funds or remortgage to release some equity in your home. You can usually extend your term with any remortgage product. The popular options for homeowners are remortgage for home improvements or a debt consolidation remortgage in Birmingham.

Again, whilst you will extend your term over a longer period so you can lower your monthly mortgage repayments, you will pay more interest overall by the time your term has finished.

You should think carefully before securing other debts against your home. By adding your unsecured debt to your mortgage, which is secured on your home, you may endanger your home if you cannot make the necessary repayments.

Although the total monthly cost of servicing your debt may have decreased, the total repayment cost may still have increased because the duration of your mortgage is longer than it may have taken to repay the original debts.

When wouldn’t I be able to remortgage in Birmingham and extend my term?

Although there are many mortgage lenders on the panel, there are many factors that could limit your ability to remortgage in Birmingham and extend your term. These include, but are not limited to, your age, the type of mortgage, and any mortgage debt.

Just bear in mind that there may still be options to help you reduce your monthly mortgage payments. Your dedicated mortgage advisor in Birmingham will review your case and look for the most suitable outcome to help you.

Can I remortgage in Birmingham to extend the term of my interest-only mortgage?

This can be a bit complex, as few mortgage lenders will give you the opportunity to extend the duration of your interest-only mortgage. Some may not have an issue with this, though you will still owe the lump sum of interest once your term concludes and they may want to avoid payment delays.

We tend to find that most residential properties will be on some variation of a repayment mortgage, as a residential interest-only is much less frequently taken place in modern times. Instead, it is more common to find an interest-only attached to a buy to let property.

Not only will you have the same lump sum repayment problems, but a mortgage lender may not allow you to extend your term if the property still has a tenant living inside.

In any situation, your best way may be to consider taking out a remortgage on your property so you can replace your mortgage only with a mortgage repayment. This would allow you to continue by paying both the capital and interest.

We always recommend talking to an expert remortgage advisor in Birmingham so you can better understand the options you may have before making decisions.

What if I want to reduce my term instead?

If you are wanting to reduce your term instead, which can also apply to almost every mortgage situation again. In this circumstance, quite the opposite of extending your term, you would repay much less overall, although monthly payments would increase.

Alternatives to Extending Your Term

Rather than taking out a remortgage so that you can extend your term, you may have other options available to you if you want to save money per month. We have already looked at remortgaging, but what about downsizing?

Downsizing is where you sell your current home and instead move into a smaller house. We tend to find a smaller home could cost less, reducing the need for a big mortgage, which could have lower monthly mortgage repayments if taken over the same term.

A further option, for homeowners over the age of 55, with a property that is worth at least £70,000, is equity release in Birmingham. This could allow you to release tax-free funds from your home, either as a lump sum or in occasional payments, through a lifetime mortgage.

Even then, equity release in Birmingham might not be the most appropriate path for you to take. There are also options for homeowners over the age of 50, such as retirement interest-only mortgages and term interest-only mortgages, known as RIO’s and TIO’s.

As it would work when taking out an equity release plan, with a RIO or TIO, your loan will only be repaid when you are dead or have moved into long-term care, with your home being sold at either stage.

At Birminghammoneyman, we have in house trusted and dedicated later life mortgage advisor in Birmingham. Who will be happy to review your feasible options and alternatives as a later life homeowner, advising on the most suitable path to take, based on what you wish to achieve, and your future plans.

Ask for a personalized illustration to understand the characteristics and risks of equity release and lifetime mortgages.

A lifetime mortgage can affect the value of your estate and it could affect your right to current and future means tested benefit. The loan plus accrued interest will repayable upon death or moving into long term care. 
 


Last Edited: 29/09/2022

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