Your journey into the world of mortgages can be a rewarding endeavour. By the end of your process, you will likely end up with one of the following applying to you;
No matter which of these was your desired route, there will eventually come a time when your mortgage term is nearing its end. At this point you will have several options;
A remortgage is where you will use the proceeds borrowed from a new mortgage, in order to pay off a mortgage that you already have. There are a large amount of different options when taking out a remortgage, ranging from smaller options, to much larger options.
Generally speaking, the initial mortgage deal you’re on will last around 2-5 years, featuring lower fixed rates or possibly even rates at a discount. In some cases you’ll find yourself placed on a tracker mortgage which will follow on with the Bank of England’s base rate.
Most customers will fall onto their lenders Standard Variable Rate at the end of their term (you may see this mentioned across the web only as SVR).
To briefly explain this, an SVR is a mortgage that has an interest rate determined by what the lender wishes to charge and it can change. This also won’t follow the Bank of England’s base rate like a tracker mortgage would.
Because of the nature of them, these are usually the most expensive mortgage routes to take, leaving many to look at their options for remortgaging to get better rates, which will hopefully save you a good amount of money on your monthly mortgage repayments.
A few years into your living in your home, you may decide that something is missing. Maybe you need an extra room or larger living space for your kids or belongings, a new kitchen, a new office, or converted loft.
Rather than move to a larger house, many looking to release equity by taking out a remortgage at the end of their term, so that they can cover the costs of these plans.
Project planning and managing can seem a little daunting, especially when you have to factor in getting planning permission. That being said, others would maybe say that it’s a lot less stressful and more rewarding than the process of finding a new home, selling your current one and having to move everything you own.
Further down the line, this may prove to be even more of a beneficial plan, as creating more space and having good quality craftsmanship will likely increase how much your property is worth, which is useful for if you ever do decide to sell your home or rent it out.
Sometimes we find when speaking to customers that people may also wish to remortgage in Birmingham for a better mortgage term, by reducing the length of the term they are on or switching to a product that is a bit more flexible for their needs.
When you reduce how long your mortgage term is for, it means you won’t be paying back your mortgage for as long, though it also means that your monthly repayments will be a lot higher. The longer that you take out your term for, the lower your monthly mortgage payments will be.
Some customers may choose for a more flexible mortgage term. In doing so you may gain the ability to overpay your mortgage, which results in your mortgage being paid quicker. It can also give you the option to carry the same mortgage and rates over to another property, if you ever need to in the future.
Though a flexible mortgage sounds like the ideal mortgage type, they usually come in the form of a tracker mortgage, which as mentioned earlier will follow on from the Bank of England base rate. This will mean that one month your payments could fluctuate based on interest, making them a little inconsistent & unreliable.
Everyone that owns a home will have some level of equity in their property. This can be worked out by looking at the difference between what’s left to pay on the mortgage and the current value of the property.
As discussed briefly earlier, remortgaging can be used to fund any potential home improvements. Still, there are more options out there than just that. Some homeowners will use it to cover long-term care costs, boost their income, have a well-deserved holiday, pay off an interest-only mortgage, or free up some spending money.
Sometimes when speaking to customers, we’ll also find that some buy-to-let landlords in Birmingham will use equity release as a means of covering the necessary deposit to purchase an additional property for their existing property portfolio.
Whilst we’re mentioning the topic of equity release, we should probably mention another big one people use their equity for, that being to pay off any unsecured debts that may have built up over time.
Though it may seem easy to the untrained eye, debt consolidation bases not only takes into account the amount on how much owe on your debts, but also the value of the property and the state of your credit rating. Because of this, you may be limited in the amount you are allowed to borrow for a mortgage.
On top of this, to pay off your previous mortgage and your debts, you will need to borrow an amount that is higher than your outstanding mortgage amount. This will mean that your monthly repayments will probably be higher. Granted none of this is ideal, but you can worry less knowing that you have some options out there if things don’t go to plan.
If you find that you do have a particularly damaged credit rating, you still have options out there. You must bear in mind though that these will not be easy and require very specialist remortgage advice in Birmingham first.
Even with a specialist on hand, there is no guarantee you will definitely obtain a mortgage. You should always seek mortgage advice prior to consolidating and securing any debts against your home.
If you are a homeowner nearing the end of your mortgage term, wondering what your options may be for remortgaging, we definitely recommend that you get in touch with a knowledgeable and reputable mortgage broker in Birmingham today.
A dedicated and trusted mortgage advisor in Birmingham will help discuss your circumstances, creating a game plan for the next step of your mortgage journey. It’s always our aim to ensure the second time around is quicker and smoother than your previous mortgage experience.