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When your mortgage term is coming to its end. Your options are to either sell up and upsize/downsize into a new property. Maybe you are in the market for selling your portfolio to the tenant(s) or another buyer and want to know what options are available? The most popular option, however, overall of the above, is a Remortgage.
A Remortgage is a process of moving your existing mortgage to a new provider or switching to a different arrangement with your current lender. There are lots of different opportunities when taking out a Remortgage.
By taking advantage of the 20 years or so knowledge of our resident “Moneyman” Malcolm Davidson mortgage advisor and director of Londonmoneyman and host of our YouTube channel MoneymanTV, has put together a quick remortgage guide to help you understand the main reasons homeowners choose to remortgage.
In some cases, your initial mortgage deal will normally last somewhere between 2-5 years and feature low fixed rates or possibly discounted rates. Your lender may suggest placing you on a tracker mortgage, which follows the Bank of England’s base rate.
When your mortgage term is ending you will be placed onto the lenders Standard Variable Rate (SVR). SVR’s can affect whether the interest rate moves up or down, depending on what the lenders choose.
They also don’t follow the Bank of England’s base rate like a tracker mortgage hence why they can be riskier, as the lender is not legally obligated to charge the recommended amount.
Because of this, SVR’s are usually the most expensive option to take, leaving many to look at Remortgaging for better rates, which will hopefully save them some money on their monthly repayments.
Spending several years occupying your home, you may come across wanting an extra room or a much larger living space to start a family, a newer and modern kitchen, a new office as more people are working from home or loft conversion. If you weren’t sure whether to do some home improvements or move into a bigger house, some choose to release their equity with a remortgage to cover the costs of any work needed or wanted.
The idea of having to obtain planning permission and fund/manage your own project seems time consuming, some will argue it’s a lot less stressful and more rewarding than the process of having to go property hunting again, selling your current home and having to move all your possessions.
At the same time, creating more space and having good quality craftsmanship will likely increase the value of your home. This comes in handy if you ever do decide to sell up or rent out.
Some homeowners may choose to Remortgage in London for a more suitable mortgage term, whether that’s switching to a more flexible product or reducing the length. However, doing so means you won’t be paying back your mortgage for a long duration. But, you’ll be faced with higher monthly repayments. The longer your term, the lower the payments will be over time.
Other homeowners may choose to opt-in for their remortgage term to be more flexible. The befits of doing so are if you gain the ability to overpay, you will be able to pay off your mortgage quickly, as well as being able to carry the same mortgage and rates over to another property, should you decide to move later down the line.
We tend to find that flexible mortgages usually come in the form of a tracker mortgage. A tracker mortgage follows the Bank of England base rate. Meaning your mortgage payments will fluctuate based on interest.
All homeowners will have some form of equity in their property. This is worked out with the difference between what is still owed on the mortgage and the current value of your property. As previously mentioned, equity can be used for home improvements. However, there are other routes to go down.
Some homeowners choose to cover long-term care costs, whereas others may choose to add to their income, to have a holiday, to pay off an interest-only mortgage or simply have some extra money to spend on whatever they would like.
In other cases, Buy-to-Let landlords will use their remortgage to release equity as a means of covering their deposit for purchasing additional properties for their portfolio.
Equity Release in London is something that homeowners who are over the age of 55, with a home that is worth at least £70,000, could benefit from using. Take a look at your options by getting in touch with an expert later life mortgage advisor who can help you better understand lifetime mortgages.
Others may choose to release equity to pay off any unsecured debts that may have built up over time. However, Debt Consolidation not only bases the amount on how much you are owed and the value of the property, but things like your credit rating are also a factor. All this can limit you on the amount you can borrow.
To pay off your previous mortgage and your debts, you will need to borrow a substantial amount. This means your monthly repayments will be higher.
If you have a poor credit score, you might have a slim chance to remortgage, you might benefit to look into Specialist Remortgage Advice in London. Even then, there is no guarantee that you could remortgage.
You should always seek mortgage advice before choosing to consolidate and secure any debts against your property.
If you are coming to the end of your term and are wanting to know what your options are, we highly recommend you book your free mortgage appointment to speak with one of your experienced and trusted Mortgage Advisors in London.
Our team will discuss what’s the most suitable options for you and your circumstances, to create the most suitable plan of action for you in the next step of your mortgage adventure. We aim to ensure this go-around is a quicker and easier process than when you took out your initial mortgage.
There are many different types of mortgages, and some of them will be perfect for your situation and some will not. The type of mortgage that you obtain will be down to what you are looking to achieve and your personal and financial situation.
There are no ‘regular’ mortgage types, there are the most popular ones and the specialist ones. Cashback mortgages fit into the specialist category as they are only taken out in certain circumstances and they have become less popular over recent years.
Not all mortgages will be beneficial to you and your situation, and that’s why it’s important to shop around and make sure that you take out a product that is right for you.
After paying off your whole mortgage term (paying off your mortgage), you will receive a lump sum from your lender. You should not confuse this with your shorter fixed terms.
The amount that you receive back is based on a percentage of what you have borrowed. This percentage is something like 1% or 2%. This may seem like a small amount, however, if you took out a £360,000 mortgage, 1% is £3,600 and 2% is £7,200. Sometimes lenders may offer a little more, it depends on the lender.
There are pros and cons to Cashback Mortgages. First of all, like other mortgage products, you may be offered some extra perks for taking out the deal. These perks could include a free mortgage valuation or some other sort of fringe benefits.
Once you receive your lump sum, you will be able to spend it on whatever you want. We’ve often seen people use the money to improve parts of their homes such as an extension or conversion. Most of the Cashback Mortgage customers that we have dealt with are those taking out lower mortgages.
Unfortunately, Cashback Mortgages can come with high-interest rates, and that is what can put people off. You should speak to a Mortgage Advisor in London to get an idea of what rates you can access.
There are many different types of mortgages. Some mortgages will not match your situation or the property that you’re purchasing, and that’s why it’s important that you find the right one. Finding the right one for you can be a difficult task though! This is where a Mortgage Broker in London like us comes in.
We can search 1000s of mortgage deals for you and we will make sure that you are on the best deal for your personal and financial situation. If you are interested in Cashback Mortgages and are considering taking one out on your property, feel free to get in touch. Getting Specialist Mortgage Advice in London could be very beneficial to your situation.
Follow our ‘Book Online’ process and book a free mortgage appointment with a Mortgage Advisor in London. Pick your own date and time, there are slots available seven days a week.
Fixed-term contracts were once considered to be more of a less conventional form of income, though nowadays they’re a lot more commonly found.
As a general rule of thumb, the only difference between this fixed-term contract employment and regular employment, is how the contract that you have is structured.
Regular employment generally will typically mean you have to sign a contract at the start of your employment, which will remain in effect until you are either terminated or you hand in your notice to the employer.
If you are employed on a fixed-term contract, this will mean you are only a contracted employee for a specific length of time, as opposed to permanently. That being said, you’re still classed as PAYE, which is similar to what a teacher on a per year contract.
Yes, it is absolutely a potential option. It may be a little challenging if you are looking for a first time buyer mortgage in London, though we do still have mortgage lenders on panel who will consider these types of circumstances.
How long your current contract length is can have an impact on whether or not you can obtain a mortgage. If your contract is a short-term one, you may find it even more difficult to take out a mortgage.
The reason for this, is because you are not guaranteed any sort of long-term employment. Coupled with a large, long-term outgoing such as a mortgage payment, this could be a risk to a mortgage lender.
Most mortgage lenders will want to see consistent, longer term contracts one after another. This will showcase to the mortgage lender that you are likely to keep on with regular contracted work, which in turn will help you in maintaining your mortgage payments.
In addition to this, you can further increase your chances of having a mortgage application accepted by having written confirmation from your employer that once your contract has ended, it will be renewed with the same employer.
If you have had or are currently having any breaks in employment, mortgage lenders may see this as a problem due to their uncertainty of whether or not you can maintain your monthly mortgage payments.
On the off chance you have had any significant employment gaps over the course of the last 12 months, you may not be able to get a mortgage. This is dependant on the mortgage lender and their own criteria, though a more sustainable income may work in your favour more with some lenders.
Further to this, what is defined as a gap in employment will vary per mortgage lender. Some will see a week as a gap of employment, whereas others may deem 4 to 5 months as a gap.
An expert mortgage broker in London will be able to check lender criteria and match you up with the most appropriate one.
In order for a mortgage lender to consider accepting your application for a mortgage, you will need to provide them with multiple pieces of identification.
The types of documentation you will need to submit to a mortgage lender, include;
An expert mortgage advisor in London will be able to take a look at your documents in advance, to make sure it is all suitable for passing along to a mortgage lender.
If they require any other forms of ID from you, they will let you know so that you are more prepared for your mortgage journey ahead.
It is very likely that, providing you have a solid history of consistent employment, with very few or no gaps and a contract with a good amount of time left on it, you will be able to apply for a 95% mortgage, only putting down a 5% deposit.
Unfortunately, because it is deemed to be a risk to the mortgage lender, if your contracts are more short-term or you have some gaps in your employment, you may need to put down a much larger deposit in order to secure a deal with a mortgage lender.
Perhaps you are already a homeowner. If this is the case and you are on a fixed-term contract, heading towards the end of your fixed mortgage period, you may be curious of the options you have present.
It is at this stage that we would greatly recommend getting in touch with remortgage experts like ourselves and benefitting from remortgage advice in London.
This is because on top of the possibility of new deals that you may be able to access, there may well have been a change in your income. Maybe you aren’t working as often as you were in the past? Is your average income lower than it used to be?
It is elements like this that can have an effect on your ability to remortgage your property. Depending, you may have limited options, perhaps even with extra costs.
Enquiring for remortgage advice in London with expert mortgage advisors is definitely recommended ahead of jumping in to remortgage your home.
For anyone who is curious about whether or not it is possible for a home buyer or homeowner to obtain a mortgage whilst on a fixed-term contract, the simple answer to this question is yes, it is.
In order for you to have a much better chance of getting a mortgage with these circumstances, book a free mortgage appointment today with a dedicated mortgage broker in London and we’ll see how we are able to help you.
Towards the end of the initial fixed period of your mortgage, will be the time to start looking at your options for a remortgage in London. If you were to consider remortgaging with the same lender, this would be called a product transfer.
This can be something that not too many people know about, particularly if you have been doing your research before your fixed period ends. Truth is though, that product transfers are perhaps just as, if not more popular than a remortgage itself.
A remortgage is taking out a new mortgage with a new lender, which will replace your previous mortgage. That tends to come with more favourable interest rates and lower monthly repayments. Doing so would require documentation to be provided in order to qualify for that deal.
When you make a product transfer, you will be with the same lender. This means that providing your circumstances haven’t changed, you usually won’t be asked to submit any further documentation. You can choose a new deal that you qualify for and have it replace the previous one.
The main reasons for looking to do a product transfer, are appealing to homeowners. First, you could save yourself quite a bit of money.
This is because it doesn’t require solicitors or a valuation, so those fees won’t be there. You also have the option of saving yourself from a redemption fee or early repayment charge (though arrangement fees might still be present).
It can also prove to save you a lot of time and allow for easier service. Remortgaging in London can often take a while to put together, whereas because the lender already knows what you are like and likely won’t require any documents, product transfers can often be a lot quicker to finalise.
Others may instead opt for a remortgage. The reason this is a popular choice is because of the flexibility involved.
You will have access to more than just your current lender, with potentially better deals available elsewhere. If you manage to find a much better rate than you are currently on, this will save you money in the long run.
Additionally, a product transfer only allows you to take out a new mortgage on the same term, whereas a remortgage can allow for new terms. Doing this could allow for your next remortgage process to go easier.
Another popular choice for people to look out for is to remortgage to release equity (the difference between what is owed and the value of the property), as a means of funding potential home improvements, putting down the deposit for another property, and more.
Releasing equity doesn’t quite work the same with product transfers, though you may be able to arrange something called a further advance. Get in touch with a mortgage specialist to learn more about further advance and product transfers.
Typically speaking, because you are staying in the same property, with the same lender, you will not need a solicitor for a product transfer.
Where this will be appropriate, is if you are making changes to your mortgage terms, such as removing or adding a name to your mortgage. At this point, you will likely need a conveyancer or solicitor.
Typically speaking, you will not need a credit check for a product transfer. This may potentially be different though for some lenders. The reason this is usually the case, is because the lender already knows they can trust you to pay back your mortgage.
Alternatively, if you have had credit problems during your current mortgage or are remortgaging with another lender to do something such as release equity, you may have another credit check taken out on you.
When doing a product transfer, something you may need to look at is whether or not you have any plans to move home in the future. Your current deal may not allow you to port your mortgage to a new home.
Taking out a remortgage instead, can allow for the flexibility to port your mortgage if you need to.
Here at Londonmoneyman, our team can provide expert remortgage advice in London and will be more than happy to go over your case and take a look at what you’re hoping to achieve.
Not only will we be able to get you through the process quickly and efficiently, but you’ll benefit from the various deals available to you, thanks to the vast panel of mortgage lenders we have.
Our service goes beyond this though, as we genuinely care about our customers. If you’re looking to product transfer and we believe it’s in your best interests to remortgage instead, we will say so. The same goes if you were looking to remortgage and we felt like you should product transfer instead.
We believe in full transparency and honesty with the customer – you should be put first. To discuss your product transfer options, or for further remortgage advice, book your free remortgage review and we will see how we are able to help.
If you have been doing your research on the world of mortgages or more specifically have been having a look at what your potential options for taking out a remortgage in London, you may have come across the term “capital raising” before.
Understandably, some may be confused as to what capital raising actually is. Simply put, capital is money, which means that capital raising is the financial terminology for the act of raising money.
There are a variety of different ways that this can be achieved and it is used for all manner of reasons.
As a general theme amongst conversations we have with existing homeowners, is that they would not only like to remortgage, but they would like to do so as a way to release equity for things like home improvements, to gift a deposit or something else.
If you are not too sure what equity is; Equity is the difference between your remaining mortgage balance and the amount that the property is valued at.
If during your term your property has increased in value, rather than enquiring about a remortgage to release equity, you may have the option of utilising something called a further advance.
This type of mortgage allows homeowners to take out an additional mortgage on their property to borrow an additional amount, as a way to release a portion of equity they have built up over time.
Further advances are typically taken over longer terms and have lower interest rates than standard personal loans, though you will also have to bear in mind that you will not only be paying back your primary mortgage, but also this as well.
Both these mortgages are separate from one another, the further advance is not added onto the first mortgage. This is two individual mortgages with the same lender, on the same property, with their own interest rates.
This mortgage type is something that can be a really good option for homeowners who perhaps don’t wish to remortgage or are tied into a deal so can’t remortgage. Remember the risks though, one of which being that there will be a higher risk of repossession if you cannot keep up your payments.
A second charge mortgage is a little similar to a further advance, allowing you to once again having another smaller mortgage running alongside your existing one, allowing you to release some equity.
The biggest difference between a second charge and a further advance, is that second charges are actually with a different mortgage lender and also have different interest rates.
If you were in an unfortunate circumstance where you were faced with repossession, your initial mortgage lender will be paid back from your homes sale, with any funds remaining from that sale then going to the second lender (but again, only after the first mortgage lender is completely paid back).
There are quite a few different reasons as to why you may find yourself in the market for something that allows you to capital raise against your home.
Popular options for achieving this include to fund any home improvements you would like to make, such as an extension, new home office or maybe even loft/garage conversions. We also often hear people wanting to consolidate unsecured debts against their home.
Other instances where a homeowner may look to capital raise, is to perhaps gift a deposit to their children so they can get onto the property ladder, to buy a second home/property (common with those looking to start with a Buy to Let in London), and to pay for larger purchases.
If you have any portion of equity sitting within your property and are in the market for a capital raising mortgage, then you could be most suited for a remortgage to release equity. Of course our trusted mortgage advisors in London will make sure this is right for you before proceeding.
Book your free mortgage appointment and we will review your case to determine the most appropriate course of action. If a remortgage isn’t right for you, there may still be an alternative that fits what you are looking to achieve.
If you are aged 55+ and have a property worth at least £70,000, you may find yourself better suited for the option of equity release in London.
To understand the features and risks of equity release, ask for a personalised illustration. Our typical advice fee is up to £1,495 only payable on completion.
A lifetime mortgage may impact the value of your estate and it could affect your entitlement to current and future means tested benefits. The loan plus accrued interest will repayable upon death or moving into long term care.
** With Debt Consolidation there are some risks to bear in mind. That is why we always recommend you speak with a qualified Mortgage Advisor in London, before you look at consolidating any unsecured debts against your property.
Whether you are looking for first time buyer mortgage advice in London, thinking of moving home in London or looking to remortgage advice in London, overpaying, even by a small amount, can make a difference in the amount on the interest you pay back over your mortgage term.
According to a survey, 56% of homeowners with a mortgage never get around to overpaying. This is very interesting data because almost all mortgage applicants start off their mortgage journey with every intention of doing so (or at least that’s what they tell me!).
All Homeowners know that overpaying, even by relatively small amounts, can make a big difference to the amount of interest paid back over the term. The earlier you start overpaying the better too as the extra payments have a longer period to have an effect.
The survey by Compare the Market suggests that Homeowners cannot afford to make extra payments, but I feel the main reason is that life simply gets in the way. We know overpaying is the “right” thing to do but let’s face it, there’s always something else you can be spending your money on and plenty of those things are more exciting!
Part of the problem here is actually remembering to overpay. It’s not something that’s particularly likely to cross your mind too often, except perhaps when your mortgage only has a few years left.
So, if you can see something of yourself in the above and would like to overpay so that, perhaps you can retire a year or two early then what should you do?
I would recommend setting up a standing order payable to your lender each month. Set up the standing order to go out on the same day as your regular mortgage payment. E.g. your mortgage payment is, say £500pm and is collected on the 1st of the month. You can afford to pay an extra £75pm, so set up a standing order for £75pm to go out of your bank also on the 1st.
The reason for the above is that very quickly you will start to “feel” that your mortgage is actually £575pm and you will get used to that within a matter of months.
The beauty of doing a standing order is that, unlike a direct debit, a standing order is controlled by the payer, not the receiver. That means that if you have a financial emergency you can quickly log into your online banking and cancel the standing order so that it doesn’t go out next month.
Whilst it would be regrettable to have to stop overpaying, at least you would have benefitted from the overpayments made up until that point. Some mortgages will even let you make reduced payments or take a payment holiday if you have been overpaying for a while. Before taking a payment break though it’s important to check with your lender that you are eligible to do so to avoid a negative mark on your credit report.
Overpaying your mortgage is a great habit to get into, you don’t need to go hell for leather at it unless you feel so obliged but even shaving a year or two off will be very welcome when you near the end of the term.
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Authorised and Regulated by the Financial Conduct Authority.
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Londonmoneyman.com & Londonmoneyman are trading styles of UK Moneyman Limited, which is authorised and regulated by the Financial Conduct Authority.
UK Moneyman Limited is Registered in England, No. 6789312 | Registered Address: 10 Consort Court, Hull, HU9 1PU.
Authorised and Regulated by the Financial Conduct Authority.
We are entered on the Financial Services Register No. 627742 at www.register.fca.org.uk
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