By the time your mortgage ends, you will have ended up with one of these outcomes; a dream family home, a stepping stone property you’ll later leave to climb the property ladder, or a buy to let investment property.
No matter which path you took primarily, soon enough you’ll find that your fixed period is ending. At this point you might be wanting to look at the options you have for moving into a bigger or smaller home. Sometimes a landlord may look to sell up their portfolio.
As a mortgage broker in Grimsby, however, we tend to find that most people will look to take out a remortgage.
Before we get on with the topic, let’s look at the definition of a remortgage in Grimsby. To summarise, a remortgage is the process of using funds that you have raised from taking out a new mortgage, to pay off an existing mortgage in your name. .You can do this a lot of different ways and there are a lot of different benefits to each.
The “Moneyman” Malcolm Davidson (host of MoneymanTV, our YouTube Channel) has well over 20 years of experience in the mortgage world. Using his knowledge, we have compiled a helpful guide to all the remortgage options that a homeowner may have access to.
Your fixed period will usually last within the range of 2-5 years. The fixed rates or potential discounted rates here tend to be lower. Depending on the situation you are in, you may even find yourself placed onto a tracker mortgage, which will fluctuate based on the Bank of England’s base rate.
Once you reach the end of your fixed period, you will most likely be put onto the lenders Standard Variable Rate (typically shortened to SVR). In simple terms, an SVR is a mortgage with an interest rate that can completely change depending on what the lender wishes to charge.
Whilst this mortgage type does not change with the Bank of England’s base rate as a tracker mortgage would. These changes often occur at times when the base rate or the market changes. For example, if the base rate goes up, your lender may choose to increase their rate too.
Because of this, Standard Variable Rates are often considered to be pretty expensive choices to stick with, which is why a lot of homeowners often choose to remortgage their property for better rates. The hope is that this will save you money down the line.
A couple of years into occupying your property, you may have something different in mind. Rather than finding a new place to live that covers what you would like in a home, many homeowners instead prefer to remortgage to release equity, in order to cover the costs of upgrading their current home.
We hear of customers looking to achieve all kinds of things in their homes. Some like to create more space to live in. Others are unhappy with their kitchen and would like it refurbishing. An increasingly popular one is converting the loft into another room or something else.
The prospect of planning and managing your own project, as well as getting permission from the authorities when necessary, can seem daunting. That being said, a lot of customers who have done just that would argue it’s a lot less stressful than finding a new house, and is a lot more rewarding.
This may benefit you further down the line too, as creating more space and having a solid, well built home is something that will likely increase how much the house is worth. In the event you did decide to sell up and move home, this would come in handy.
Depending on the situation you are in, you may just prefer to take out a remortgage in Grimsby in order to access a better mortgage term. This can be achieved either by reducing how long your mortgage term is or by switching onto a product that is more flexible.
When you reduce your mortgage term, you won’t be paying back, nor will you be restricted for as long. That being said, it tends to mean higher monthly mortgage payments for you. The longer you make your mortgage term, the less you’re likely to have to pay per month.
A lot of the time, customers may choose a more flexible mortgage term at remortgage time. This may give you the option to overpay more than usual (this comes with a cap typically), meaning you could pay your mortgage off quicker. Also if you wish to move, you may be able to carry that mortgage onto a new property.
Though this could be the best route to take, they will typically come in the form of tracker mortgages. As we looked at before, this will correlate with the Bank of England’s base rate. This means your monthly payments could be a little unreliable, as they may change.
Unless the country were to experience another serious market crash, every homeowner will have a certain amount of equity existing within their home. This can be worked out with the difference between what you still owe on the mortgage, and the value of the property.
As mentioned previously, people usually look at taking out a remortgage to release equity as a way of assisting with the funding of home improvements, though you may have something else you wish to use this for.
Popular choices include to cover long-term care costs, provide an income boost, cover the costs of a large holiday, pay off an interest-only mortgage or to simply free up some extra disposable income.
From time to time, we also find that Buy-to-Let landlords will look to remortgage to release equity from one of the properties in their portfolio, as a way to cover the deposit for a future purchase.
Following on from the latter section, some may remortgage to release equity, to pay off any built up, unsecured debts.
Though it sounds simple, how much you can borrow for a debt consolidation remortgage depends on how much you owe a creditor, the value of your home and the current state of your credit rating. This means you could be limited in how much you are allowed to borrow.
In addition to this, in order to pay your previous mortgage off entirely, as well as the debts you have accrued, you will have to borrow more than you actually require for a mortgage. This will most likely mean higher monthly payments.
It’s not at all an ideal situation, but you’ll at least have comfort in knowing that should you find yourself struggling, there are some options out there that you can take.
If you have a damaged credit rating, you’re not completely out of options. That being said, it will be a challenge and you will require specialist remortgage advice in Grimsby before you can go forward with it. Even then, you are not guaranteed to get a mortgage.
Homeowners should always seek out the advice of a specialist mortgage advisor in Grimsby before they consolidate any debts against their home.
If you are reaching the end of your initial fixed period and wondering what your options may be for a remortgage in Grimsby, please do get in touch.
Book your free remortgage review to speak with an open & honest mortgage advisor in Grimsby today. We work around your schedule, so you can speak to someone at a time that is convenient for you, whether it be early in the morning or later in the evening.
A trusted mortgage advisor in Grimsby will be able to go over your case and any plans you may have, in order to create a suitable plan of action for your mortgage journey. We always aim to make sure that this time around is as quick, if not quicker than your last process.