The mortgage journey is one full of adventure and the potential for great reward. It has its fair share of both highs and lows, but ultimately you will end up with either your dream property to settle down in and maybe start a family, a stepping stone property to propel you higher up the ladder or an investment purchase to provide you with some additional income.
Regardless of the route you took, there will eventually come a time when you are reaching the end of your mortgage term. You could sell up and upsize/downsize into a new home, starting fresh. Maybe you are looking sell your portfolio to the tenant or another buyer and look at other investment opportunities? The most popular option that customers take, however, is a Remortgage.
First, let’s look at the definition of the term. A Remortgage is where you use the proceeds from a new mortgage obtained to pay off a pre-existing mortgage. There are a wide variety of different options when taking out a Remortgage, ranging from minor to major.
Utilising the 20 years or so knowledge of our resident “Moneyman” Malcolm Davidson (host of our YouTube channel MoneymanTV), we took the time to put together a quick guide to all the options you could have when it comes to taking out a Remortgage in Essex.
Your initial mortgage deal will normally last on average around 2-5 years and feature low fixed rates or possibly discounted rates for that time period. In some cases, you may even be placed on a tracker mortgage, which follows the Bank of England’s base rate, increasing and decreasing as and when their rate does so.
When your existing mortgage term ends you will likely be moved along to something known as the lenders “Standard Variable Rate” (you may see this mentioned across the web simply as SVR). In short, an SVR is a mortgage with an interest rate that can change depending simply on what the lender deems it necessary to charge. This does not follow the Bank of England’s base rate like a tracker mortgage does.
As such, these are usually end up being the most expensive paths to take, leaving many to look at Remortgaging for better rates, with the idea of hopefully saving you money on your monthly repayments.
2-5 years into occupying your home, you may have a complete change of heart. Maybe you feel that you need an extra room or larger living space for your kids or belongings, a new kitchen, a new office, or a handy new loft conversion. Rather than move into a larger house, a large number of homeowners seek to release their equity with a Remortgage in order to cover the costs of these additional projects.
Though the concept of having to obtain planning permission and fund/manage your own project may seem rather daunting, some would argue it’s a lot less stressful and more rewarding than the process of having to find a new home, selling your current one and moving your personal belongings.
Over the course of time, this may prove even more beneficial. Creating more space and having good quality craftsmanship will likely increase the properties value, something that is useful for if you ever do decide to sell up or rent out.
In many cases, people may simply wish to Remortgage in Essex for a better mortgage term, whether this be by reducing the length or switching to a more flexible and favourable product. Reducing the length does mean you won’t be paying back your mortgage for as long as you might have done, so aren’t completely tied down forever, but as such your monthly repayments will be a lot higher than you might’ve expected beforehand. The longer your term, the lower the payments will be over the length of said term.
Some opt for a more flexible mortgage term when the time comes to Remortgage in Essex. The benefits provided by this option can prove winsome to some current homeowners. You may gain the ability to overpay, resulting in the choice of paying your mortgage off as quickly as you’d like, as well as being able to carry the same mortgage and rates over to another property, should you decide to move at any time later on in life.
Though a flexible mortgage sounds like the ideal situation, they usually come in the form of a tracker mortgage, which as mentioned previously, follows the Bank of England base rate. This means one month your payments could fluctuate based on interest, making them a little unpredictable and unreliable in an instance where most would rather have financial security.
Everyone has some level of equity in their home or property. This is worked out with the difference between what is still owed on the remaining mortgage and the current value of the property. As touched upon briefly, this can be used for home improvements, however, there are still a variety of options available for you out there.
Some use it to cover long-term care costs, to supplement their own income, to have a nice family getaway, to pay off an interest-only mortgage or to simply have free spending money to do with as they please.
In some cases, we find that a lot of Buy to Let landlords will use Equity Release as a means of covering their deposit for buying a future property to add to their property portfolio.
On the topic of Equity Release, another big one people use it for, is to pay off any unsecured debts you may have built up over a period of time.
Though it may seem like an easy enough process, Debt Consolidation not only bases the amount on how much you’re owed and the value of the property, but it is also based on your credit rating. This could mean you are limited in the amount you are able to borrow.
Additionally, to pay off your pr-existing mortgage and your debts, you will need to borrow more than the amount of your outstanding mortgage. This means your monthly repayments will most likely be a fair bit higher. Though not an ideal situation, at least you can rest assured that should you find yourself in an unfortunate predicament, you do have some options out there.
If you have a particularly damaged credit rating, you do still have options to choose from, though these will be quite difficult and require very Specialist Remortgage Advice in Essex before going forward. Even then, there is no guarantee of a remortgage, so do not get your hopes up until you speak with a professional.
You should always seek mortgage advice in Essex before choosing to consolidate and secure any debts against your home.
If you are reaching the end of your term and are wondering what your option may be for Remortgaging, it can be very beneficial to Get in Touch with an experienced and dedicated mortgage broker in Essex.
An advisor will be able to discuss your circumstances and future goals, in order to create the best plan of action for you in the next step of your path to obtaining a mortgage. It is our aim to ensure this go-around is a quicker and smoother process than your initial mortgage journey.