If you have been reading up on mortgages or more specifically have been having a look at what your options may be for taking out a Remortgage in Birmingham, you may well have seen the term Capital Raising before.
When seeing this term, you may be confused and wonder what exactly is Capital Raising? Capital Raising is simply the act of raising money for a purpose, with money in this case referred to as the Capital. There are a few different ways this can be achieved and it is used for a variety of different reasons.
Generally we find that it is quite common for customers to take out a Remortgage as a means of releasing the equity that is in their property. If you are unsure of what Equity is; Equity is the difference between what you have left to pay on your mortgage and how much the property has been valued at.
If the value of your property happens increases in value over the duration of your mortgage, rather than Remortgaging to Release Equity, you may have the option to take out a Further Advance. This mortgage type allows you to take out an additional mortgage on your property to borrow an additional amount, as a means of releasing the equity in your property.
This mortgage will generally be taken out over a longer term and have interest rates at a lower rate than a standard personal loan would be, although this is something you will pay back alongside your existing mortgage.
This can be a really solid option for homeowners who are not looking to Remortgage, or maybe tied into their existing deal. It’s important to remember though that there are risks, such as a higher risk of repossession if you cannot keep up the much larger number of monthly repayments.
A Second Charge Mortgage works in a similar way to a Further Advance, as with this mortgage type you will be taking out an additional mortgage alongside the one you already have, as a means of releasing the equity in your home for future home improvements or anything else you wish to spend your newly acquired income boost on.
The difference between a Second Charge and a Further Advance is that with a Second Charge you will often be with another lender and on a slightly different interest rate. In the unfortunate event of a repossession, your initial mortgage lender will be paid back from the sale of the property in question, with any remaining funds used to pay off the Second Charge with the second lender.
There are lots of reasons why you may find yourself needing to Capital Raise and release equity via a Remortgage. The options for this that we often hear include to fund any Home Improvements, Modifications or Alterations, such as a new home office, a possible home extension or even a conversion to a loft or garage. Sometimes, we also see customers using these to consolidate any debts that you have gathered over time.
Other circumstances wherein a homeowner may use this include; to gift a deposit to your kids, to purchase a second home (usually an option with Buy to Let Landlords in Birmingham), and to pay for larger purchases such as a car, wedding or holiday.
If you have any equity in your property and are in the market for a capital raising mortgage, then a Remortgage in Birmingham could be beneficial to you. As a general rule, mortgage lenders will let you borrow up to 90% of the value of your property.
Please do Get in Touch and we will advise you of the most appropriate course of action to take for your circumstances. If remortgaging isn’t quite the option for you, taking out unsecured credit might be a more suitable option. A standard Remortgage can take an estimate of around 4 to 6 weeks to fully go through.
With Debt Consolidation there are some risks to bear in mind. That is why we always recommend you speak with a qualified Mortgage Advisor in Birmingham, before you look at consolidating any unsecured debts against your property.
Birminghammoneyman is an experienced Mortgage Broker in Birmingham, here to help you find the best capital raising mortgage deal for your financial, as well as personal circumstances. All of our customers will benefit from a free Remortgage consultation with a qualified advisor. During this consultation your dedicated mortgage advisor in Birmingham will make a full recommendation.
If you happen to be over the age of 55, you may find yourself better suited for the option of Equity Release in Birmingham.