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Remortgaging: What Is It and When Might I Want It?

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Mortgages last a long time. Your financial situation may change many times over the span of your mortgage. This means that the product you selected at the beginning of the mortgage period may not be the best product for you years down the road. There might be a better deal out there to suit your repayment needs.

What is it?

Remortgaging means changing your mortgage deal. This can mean switching to a different product from your existing lender or changing lenders altogether. However, when you remortgage, the mortgage is still borrowed against the same property, and you don’t move, you’ll simply change the mortgage product you have against your current property.

There will often be fees that come with remortgaging. Some of these may come in the form of exit fees from your current mortgage, arrangement fees and booking fees for the new mortgage, and solicitor fees to register the new lender’s interest on the property.

Why Remortgage?

There are a number of reasons why it might pay to remortgage. However, it is always worth consulting an independent mortgage adviser to analyse your current situation and help choose a package to change to.

Your Fixed Rate Mortgage Will Soon End

Many people decide to get a remortgage because their fixed interest rate period is about to end. Most fixed interest rate mortgage periods last between two and five years, after that period you will be on your lender’s standard variable rate (SVR). In this scenario, it may pay to remortgage and find a cheaper rate for when your fixed rate period ends.

You Need More Flexibility

You might have recently had a significant pay rise and want the flexibility to make additional repayments on your mortgage. Remortgaging to a product which allows you to make additional repayments would bring you the flexibility you need.

National Interest Rates are Rising

If the Bank of England is planning on increasing its base rate, you may find your mortgage payments increase with it. Remortgaging to a fixed rate mortgage could save you money.

Debt Consolidation

If you have outstanding debts which are incurring high interest rates, it may be worth consolidating them within your mortgage, where the interest rate is much lower. However, be careful, as these debts would reduce the equity you own in your home.

Home Improvements

Many homeowners use remortgaging as a way to receive credit to carry out home improvements. Just be aware that your lender may wish to see proof in the form of construction quotes before they allow you to borrow the money on your mortgage.

Remortgaging can save you a significant sum of money when it is done correctly, and all the costs are considered. However, there are many factors to consider and costs associated with remortgaging. For this reason, it pays to take the time to explore all options and consult an independent mortgage adviser where necessary.

Everything You Need to Know About Buy-to-Let Mortgages

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If you intend to let out your property to tenants, you will need to select a buy-to-let mortgage product. They work in a similar way to normal mortgage products, but there are some striking differences. Before you take the plunge and invest in a buy-to-let property, it is worth familiarising yourself with the key differences.

Buy-to-Let: The Key Differences

Fees on buy-to-let mortgages are often higher than traditional mortgages, and lenders will usually want a larger deposit up front, typically between 20% and 40% of the property’s value. Also, most buy-to-let mortgages are interest-only. This means that unlike most mortgages, where you pay off the capital of the loan as well as the interest over the life of the mortgage, at the end of an interest-only mortgage, you still have the capital of the loan to repay.

Many borrowers assume they will be able to sell the property at the end of the mortgage period to repay the capital. However, if house prices have fallen, there is no guarantee that you will receive the same amount you paid for the property. You will then have to come up with the difference to pay off the remaining capital on the mortgage.

Lenders also have more stringent eligibility criteria for buy-to-let mortgages. Statistically, borrowers are more likely to defect on a buy-to-let mortgage; therefore, it represents a higher risk for the lender than a traditional mortgage. For this reason, many lenders will not allow borrowers under 25 years old or those that have an annual income of less than £25,000 to take out a buy-to-let mortgage.

Calculating Affordability

Unlike a traditional mortgage, which considers your income, personal pension, and benefits when calculating how much you can borrow, a buy-to-let mortgage uses rental income to make the calculation.

Typically, lenders will not approve the mortgage unless your rental income will be more than 125% of the monthly mortgage repayments. For example, if you will receive a monthly rental income of £750 on the property, a lender will not provide a mortgage with monthly repayments of more than £600. The lender will contract a surveyor to carry out a valuation and assess the rental value of the property before the mortgage is approved.

Tax

Buy-to-let investors are subject to different taxes than other homeowners. Firstly, stamp duty tax bands are higher on buy-to-let properties. They are typically 3% higher than residential purchases. Your rental income may also be subject to income tax, and when you sell the property, any profit you make will be subject to Capital Gains Tax.

With higher taxes and increased risks in buy-to-let mortgages, landlords must be financially secure and confident they can meet the repayment terms before agreeing to them.

How to Spot a Good Mortgage Adviser

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Mortgage advisors guide you through what for most people will be the most significant financial decision of their lives. A good broker’s advice is invaluable and can have a long-lasting positive impact on your financial situation. Similarly, the damage a poor adviser can do to your long-term financial health can be astronomical. Before you sign anything, look for these tell-tale signs in your mortgage advisor to ensure you are receiving nothing but professional advice from an experienced and conscientious advisor.

They Have Referrals

Good mortgage advisors often have a strong set of online reviews. There are apps on the market, for instance, which allow you to easily compare reviews of mortgage advisers. There are also awards that reward advisers with the highest level of service feedback and can be another great place to start – although it’s worth noting that many excellent advisers don’t enter themselves for awards.

They Are Regulated

Good mortgage advisors publicly declare that they are authorised by the Financial Conduct Authority (FCA) and can demonstrate this by citing their FCA number.

The FCA was set up to regulate the UK’s financial services market and its mission statement is to ensure companies remain honest, fair and effective. Brokers who are authorised by the FCA are obligated to work in your best interests, and to demonstrate this periodically to the regulator.

Companies become authorised to trade by the FCA after they have submitted themselves to the regulator and met its requirements. Therefore, it will usually be the case that any mortgage broker you speak to who is not authorised by the FCA has either not met the requirements, or is currently undergoing the authorisation process, or has chosen not to become authorised. In each case, you should proceed with caution.

They Ask Pertinent Questions

A good mortgage advisor will thoroughly evaluate your repayment capabilities before recommending a product. This means asking pertinent questions about your household finances and professional situation.

A good mortgage adviser will ask questions about your credit rating, the length of time you expect to live in your home, your outstanding debts, and the type of property you plan to buy. They will then take these answers to calculate what mortgage product would be best for you, and come back with several product options, with clearly explained reasons why they selected these products based on your answers and financial situation.

They Are Excellent Communicators

The best mortgage advisors keep you updated and informed at every stage of the process and are readily available should you have any questions or require clarification. Even if it is just a call to say that everything is proceeding on schedule, truly excellent advisers will keep you in the loop.

This communication should extend to the whole duration of the mortgage. If a better deal or rate becomes available, a good mortgage adviser would let you know and explore how the product could benefit your financial circumstances.

The best mortgage advisors are the ones that consistently make your interests their top priority. They will clearly demonstrate this in every aspect of their service. If at any point you feel like your advisor is not acting with your best interests at heart, then it might be time to look for one that will.

The Mortgage Process Explained for First-Time Buyers

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Although the mortgage process involves paperwork, credit scores and legal fees, first-time buyers can reduce much of the work by familiarising themselves with the application process. Entering the process prepared and familiar with each stage of the process will streamline the procedure and help you navigate your way through the mortgage application as swiftly as possible.

Stage One: How Much to Borrow?

Many lenders websites offer mortgage calculators which will help you get a rough starting idea of how much you can afford to borrow. Typically, your mortgage will be around 3.5 times the largest household salary, plus the secondary household salary; or three times the joint household income. However, the amount of money you have saved to put down as a deposit will also affect the figure the lender is willing to let you borrow.

Although these online mortgage calculators offer an initial, general indication of the amount you can borrow, it will be subject to the lender’s own, more thorough, assessment. The lender will need to see the following when carrying out an assessment:

  • Copies of both of your photo IDs.
  • Proof of address.
  • 6 months of bank statements on all of your bank accounts.
  • 12 months of loan statements on any loans or existing mortgages you may have.
  • 6 months of credit card statements.
  • A salary certificate signed by your current employer.
  • Your last one or two P60 forms.
  • 3 months of payslips.
  • Any separation agreements and maintenance commitments you might have.

The lender will evaluate your documentation and calculate the balance they are willing to lend you. During the first meeting with your mortgage provider, they should also talk you through their application process and clarify any questions you may have about the process.

Once your lender has decided how much they will lend you, they will give you an agreement in principle. This means they have agreed to lend you this figure, providing they are satisfied with the property you select to purchase.

Stage Two: Work Out the Costs of Buying a Property

Now you have your agreement in principle, you can put in an offer on a property. But before you start looking at properties, it is worth totalling up all the hidden costs associated with getting a mortgage, so you can consider these in your total property budget. These costs could include:

  • An Administration Fee to the lender of anything up to £1,000.
  • A Mortgage Evaluation Survey of £225.
  • Legal Fees which are typically around £500 for buyers.
  • Land Registry Fee of £220
  • An Independent Survey which could cost more than £300.

These fees are unavoidable and are part of the mortgage process. When you have budgeted for these fees, and you have a strong idea of what your budget will be, you can start viewing properties.

Stage Three: After You Have Found a Property

Once you have found the property you want, and your offer has been accepted, you must proceed to the full mortgage application. This is when your mortgage fees will have to be paid.

You will now need to find a solicitor to represent you and initiate the legal process involved in buying a property. Find a solicitor with plenty of experience in the area of property purchases and don’t be afraid to shop around to find a competitive price.

Stage Four: Conveyancing and Valuations

Your mortgage lender will want to carry out its own checks on the property to ensure that it is suitable collateral for the mortgage loan. Their valuation is not as thorough as an independent evaluation. It will pick up on any serious structural faults in the property but will not tell you about any costly maintenance issues that could appear in the near future. This is why it is best to get an independent survey carried out alongside the lender’s evaluation.

Once these checks have been completed, and both you, and the lender, are happy with the property, it is time for completion. At this stage, you will hand over your deposit and agree on a date to exchange contracts. From this point on, your deposit is non-refundable, and if you walk away from the deal before completion, you will lose your deposit and legal fees you have already paid.

All that remains is to sign the relevant paperwork, exchange contracts, and receive the keys to your new home.

What is a shared-ownership home?

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What Do People Do?

Many people around the world celebrate Valentine’s Day by showing appreciation for the people they love or adore. Some people take their loved ones for a romantic dinner at a restaurant while others may choose this day to propose or get married. Many people give greeting cards, chocolates, jewelry or flowers, particularly roses, to their partners or admirers on Valentine’s Day.

It is also a time to appreciate friends in some social circles and cultures. For example, Valentine’s Day in Finland refers to “Friend’s day”, which is more

How will an interest rise affect mortgage rates

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What Do People Do?

Many people around the world celebrate Valentine’s Day by showing appreciation for the people they love or adore. Some people take their loved ones for a romantic dinner at a restaurant while others may choose this day to propose or get married. Many people give greeting cards, chocolates, jewelry or flowers, particularly roses, to their partners or admirers on Valentine’s Day.

It is also a time to appreciate friends in some social circles and cultures. For example, Valentine’s Day in Finland refers to “Friend’s day”, which is more about remembering all friends rather than focusing solely on romance. Valentine’s Day in Guatemala is known as Day of Love and Friendship). It is similar to Valentine’s Day customs and traditions countries such as the United States but it is also a time for many to show their appreciation for their friends.

Public Life

Valentine’s Day is not a public holiday in many countries, including Australia, Canada, the United Kingdom and the United States. However, restaurants, hotels and shopping centers may be busy around this time of the year.

Background

The origins of Valentine’s Day are not clear but many sources believe that it stems from the story of St Valentine, a Roman priest who was martyred on or around February 14 in the year 270 CE. How he became the patron saint of lovers remains a mystery but one theory is that the church used the day of St Valentine’s martyrdom to Christianize the old Roman Lupercalia, a pagan festival held around the middle of February.

Land Development Loan

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What is a land development loan?
A land development loan is essentially an early payment of funds, held against a mortgage, to finance the production, installing, or constructing of the improvements necessary to convert unimproved land into construction-ready building sites. Read More

How much Stamp Duty will I have to pay?

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What Do People Do?

Many people around the world celebrate Valentine’s Day by showing appreciation for the people they love or adore. Some people take their loved ones for a romantic dinner at a restaurant while others may choose this day to propose or get married. Many people give greeting cards, chocolates, jewelry or flowers, particularly roses, to their partners or admirers on Valentine’s Day.

It is also a time to appreciate friends in some social circles and cultures. For example, Valentine’s Day in Finland refers to “Friend’s day”, which is more about remembering all friends rather than focusing solely on romance. Valentine’s Day in Guatemala is known as Day of Love and Friendship). It is similar to Valentine’s Day customs and traditions countries such as the United States but it is also a time for many to show their appreciation for their friends.

Public Life

Valentine’s Day is not a public holiday in many countries, including Australia, Canada, the United Kingdom and the United States. However, restaurants, hotels and shopping centers may be busy around this time of the year.

Background

The origins of Valentine’s Day are not clear but many sources believe that it stems from the story of St Valentine, a Roman priest who was martyred on or around February 14 in the year 270 CE. How he became the patron saint of lovers remains a mystery but one theory is that the church used the day of St Valentine’s martyrdom to Christianize the old Roman Lupercalia, a pagan festival held around the middle of February.

Risks of a mortgage

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What Do People Do?

Many people around the world celebrate Valentine’s Day by showing appreciation for the people they love or adore. Some people take their loved ones for a romantic dinner at a restaurant while others may choose this day to propose or get married. Many people give greeting cards, chocolates, jewelry or flowers, particularly roses, to their partners or admirers on Valentine’s Day.

It is also a time to appreciate friends in some social circles and cultures. For example, Valentine’s Day in Finland refers to “Friend’s day”, which is more

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