Your journey into the world of mortgages can be a worthwhile experience. Towards the end of your process, you will likely end up with one of the following applying to you:
Whichever of these was the desired route, there will ultimately come a moment when your mortgage term is coming to an end. At this stage, there are several choices to choose.
A remortgage is where you can use the proceeds borrowed from a new mortgage, to repay a mortgage that you already have. There’s a large amount of various options when taking out a Remortgage in Birmingham, which range from smaller to larger choices.
In general, the initial mortgage deal you are on will last for about 2-5 years, featuring lower fixed rates or perhaps even rates at a discount. In some instances you will find yourself placed on a tracker mortgage that will follow on with the Bank of England’s base rate.
The vast majority of customers will fall onto their lender’s Standard Variable Rate by the end of their term (you may see this referred to through the web as SVR).
Very briefly to explain this, an SVR is a mortgage that has an interest rate defined by what the lender wants to charge and may change. This also will not follow the Bank of England’s base rate such as a tracker mortgage would.
Because of their arbitrary nature of them, these are generally the most expensive mortgage routes to take, leaving many people to look at their choices for remortgaging to get better rates, which we hope will save you a good amount of money on your monthly mortgage repayments.
Several years into your living in your home, you might decide that something was missing. Perhaps you need an extra room or a larger living area for your kids or possessions, a new kitchen, a new office, or a converted loft.
Instead of moving to a larger house, some look to release equity by taking out a Remortgage for Home Improvements at the end of their term, to cover the costs of such plans.
Project planning and managing can seem a bit daunting, especially when you have to factor in obtaining a building permit. Others would maybe say that it’s a lot less stressful and more satisfying than the process of looking for a new home, selling your current one, and having to move everything that you own.
Further down the line, this may prove to be even more of a beneficial plan, as creating more space may 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 landlords with a Buy to Let in Birmingham will use a remortgage to release equity as a means of covering the necessary deposit to purchase an additional property for their existing property portfolio.
If you are over the age of 55 and have a property that is worth at least £70,000, it may be worth looking into your options for Equity Release in Birmingham. Speak to a qualified later life mortgage advisor to learn more about this.
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.