Remortgage / Mortgage Guide
Remortgages Explained
What is a remortgage?
Remortgage means switching your existing mortgage to another deal and most likely another lender.
Why remortgage?
There are several reasons to remortgage amongst the most popular are to get a better interest rate from the existing mortgage, consolidate debt and equity release. Your financial situation may have changed or you are simply raising money for home improvement. Most people remortgage so that it will work out cheaper for them.
Which remortgage deal should I go for?
This will depend on your current situation and what you are trying to achieve. Are you trying to raise money or save money? Are you trying to reduce your monthly bills and reduce the interest you pay back or obtain funds? If you want to consolidate your debts then you should make sure that the deal you get will help you reduce your monthly outgoings.
The remortgage calculator will help give you a rough idea on how much you need to pay back but it won’t provide you with what deals are available and it won’t give you advice on which deals to go for. Only by speaking with a remortgage advisor will you be able to get accurate information on deals. The repayment plan and the remortgage interest rates will be the two issues you must consider when remortgaging.
Bad credit remortgages
For people with bad credit, it is more difficult to secure the best deal and the best bet is to speak to a broker as who can provide you with a better range of options. For customers with a bad credit history, CCJs etc a broker has access to deals targeting these customers which are not available directly from the lender.
When applying for a remortgage, a lender will carry out a credit check. It is not always wise to approach several lenders in a short span of time as for each lender you approach; a credit check will be carried out. If a lender finds out that there are too many credit checks on your name within a short span of time, this will have an effect on your credit score even further as this could imply that you are searching quickly for credit. Going with a broker will eliminate the need for numerous credit checks as brokers will have access to some of the best deals from lenders without needing the borrower to approach multiple lenders saving time and the need for several credit checks.
Mortgages Explained
Mortgages
A mortgage can refer to first time buyer mortgages or a remortgage. It is a sum of money borrowed from a lender which you will need to pay back what you have borrowed over a fixed period of time together with the interest.
Mortgages are broadly split into repayment mortgages or interest only mortgages. With repayment mortgages you have to pay back the capital and interest over the period of the mortgage. With interest only mortgages you only pay back the interest over the term of the mortgage with the capital being paid back at the end of the mortgage term.
First time buyer mortgages
As the name suggests, a first time buyer mortgage is a mortgage designed for people buying a property for the first time. A deposit is made by the borrower to the lender between 5% and 25% typically. The balance of the value is made up by the mortgage. The more deposit the borrower gives to the lender, the better rates he/she can obtain. Therefore, the first time buyer is advised to save as much as possible in order to contribute as much as possible to obtain a competitive rate mortgage. As well as paying for the mortgage deposit, first time buyers also need to plan financially for the cost of stamp duty, survey and valuation fees, legal fees and the cost of buying and moving furniture.
What is a self cert mortgage?
These are mortgages designed for people who have difficulties proving their income.
What is a 100% mortgage?
A 100% mortgage is when the borrower takes out a mortgage loan the same value as the property. There is a 100% loan to value.
What is stamp duty?
Stamp duty is a government tax which applies to all purchases of properties. Stamp duty is only payable if the property is worth over £125,000 and you are purchasing the property and not remortgaging.
What are surveys and valuations?
A survey and valuation is the same thing. A survey is a check on the state of the house to determine the value of the house. They are mainly carried out when the property is about to be sold. If there are structural damages then the value of the property could be affected. Surveys should be performed before any contracts are exchanged on the property. Surveys are only carried out on parts of the property which can be accessed such as the rooms, bathroom, toilets etc and not places underneath the carpet or the electrical wiring.
What is a conveyancer and why use one?
A conveyancer is a lawyer specialising in property law. Conveyancing is the process of legally transferring ownership of a property or land from one person to another. When buying a property it is essential that all the legal procedures are carried out in order to avoid legal issues.
