How to remortgaging, If you are staying with your existing lender, then remortgaging should be relatively straightforward. Your lender will probably contact you before your mortgage term expires to talk through your options. If not, you can get in touch with them.
If you feel a bit overwhelmed by the choice, then you may like to enlist the help of a mortgage broker. Not only will they be more adept at finding the right mortgage for you, they also have access to products that aren't available direct to consumers. All mortgage brokers are regulated by the Financial Services Authority, meaning they are bound by a code to treat customers fairly. They have to find the deal that is right for each borrower and can not just recommend products that may be lucrative for themselves. Bear in mind that they may charge for their services, which could be a factor in whether you choose to go it alone or not.
Source: yourmortgage.co.uk
Sunday, March 11, 2012
Remortgaging problems
Remortgaging problems, As a result of the credit crunch, a number of lenders pulled their larger loan-to-value (LTV - the amount lent as a percentage of the property's value) mortgages in spring 2008. All 125% mortgages were abolished, meaning that borrowers could no longer obtain loans for more than the property's worth. Although this wasn't good news for first-time buyers, it also reduced the chances that borrowers already on such deals would be able to get similar percentage loans when they came to remortgage. You may find that you need to build up more equity in your property before you can remortgage as most lenders will only offer a LTV of 80% at the moment.
Lenders are being tighter with who they lend to and how much they lend given the current economic situation, so if you bagged yourself a good mortgage deal a couple of years ago, don't necessarily expect a similar rate this time round.
Source: yourmortgage.co.uk
Lenders are being tighter with who they lend to and how much they lend given the current economic situation, so if you bagged yourself a good mortgage deal a couple of years ago, don't necessarily expect a similar rate this time round.
Source: yourmortgage.co.uk
The sub-prime remortgaging
If you had an impaired credit record (you may have previously been declared bankrupt or received a County Court Judgement) and took out a sub-prime mortgage in the past, you are likely to be paying a higher interest rate than a mainstream mortgage as you represented a higher risk to the lender. But the intention of sub-prime mortgages is rehabilitation. If you have been successfully making your monthly mortgage repayments for a number of years, and you have managed to build up sufficient equity in your property, when you come to remortgage it will make it more likely that you will be able to access a standard mortgage deal.
But do bear in mind that, as many lenders have pulled out of the sub-prime mortgaging market, if you have not repaired your credit rating that could make it difficult, or perhaps even impossible, for you to remortgage.
Source: yourmortgage.co.uk
But do bear in mind that, as many lenders have pulled out of the sub-prime mortgaging market, if you have not repaired your credit rating that could make it difficult, or perhaps even impossible, for you to remortgage.
Source: yourmortgage.co.uk
How to Remortgaging in the United Kingdom
When your mortgage deal comes to an end, you may want to shop around for a new product. This is known as a remortgage. Doing nothing and staying with your current lender after the end of the agreed term of your mortgage, say two or three years, will mean that you revert to the lenders Standard Variable Rate (SVR). If this rate is relatively attractive, you may not want to bother remortgaging. And if you have not built up much equity in your property, you may not be able to remortgage, as many lenders now insist on a minimum of 20% equity in order to secure competitive interest rates. But if you have a lot of equity in your property, you may well be able to remortgage onto a more attractive interest rate.
Source: yourmortgage.co.uk
Source: yourmortgage.co.uk
Reasons for remortgaging
Getting a better rate:
Typical reasons for Remortgaging tend to be to get a better rate (especially if your initial deal period is over and you are about to revert to an uncompetitive standard variable rate), to consolidate debt or to release equity.
You may also have to remortgage if you want to move house. In such a situation, even if your lender will allow you to transfer your homeloan in theory, it will probably require a valuation of the property to ensure it meets its standards.
Remortgaging needn't only occur when your mortgage term comes to an end. Some people take out a new mortgage simply to save money on their monthly repayments. For example, you may take out a fixed rate mortgage only for interest rates to plummet, leaving you stranded on a higher rate. Remortgaging to a more competitive rate in these circumstances may make financial sense. Bear in mind that remortgaging is not a cost-free process though. Your current mortgage may carry penalties or charges if you try to leave it early, plus there will probably be costs associated with the new deal, so factor all of this into your decision.
In the past, remortgages were popular as homeowners sought to withdraw equity from their properties to fund the likes of home improvements or holidays. In the current economic climate with slowing house prices and higher interest rates, this is not such a common occurrence and a remortgage should really be driven by need rather than luxury.
Source:yourmortgage.co.uk
Typical reasons for Remortgaging tend to be to get a better rate (especially if your initial deal period is over and you are about to revert to an uncompetitive standard variable rate), to consolidate debt or to release equity.
You may also have to remortgage if you want to move house. In such a situation, even if your lender will allow you to transfer your homeloan in theory, it will probably require a valuation of the property to ensure it meets its standards.
Remortgaging needn't only occur when your mortgage term comes to an end. Some people take out a new mortgage simply to save money on their monthly repayments. For example, you may take out a fixed rate mortgage only for interest rates to plummet, leaving you stranded on a higher rate. Remortgaging to a more competitive rate in these circumstances may make financial sense. Bear in mind that remortgaging is not a cost-free process though. Your current mortgage may carry penalties or charges if you try to leave it early, plus there will probably be costs associated with the new deal, so factor all of this into your decision.
In the past, remortgages were popular as homeowners sought to withdraw equity from their properties to fund the likes of home improvements or holidays. In the current economic climate with slowing house prices and higher interest rates, this is not such a common occurrence and a remortgage should really be driven by need rather than luxury.
Source:yourmortgage.co.uk
Remortgaging
Have you ever heard the word Remortgaging? Remortgaging can be interpreted as an agreement to change the existing mortgage for a new mortgage arrangement, and usually remortgaging deal with a different mortgage providers. in the presence of remortgaging then you can achieve a better mortgage deal from one lender to another lender. you should look at the mortgage every 3 years if you can save money.
we know that most people in this world think that the mortgage payment is the primary financial commitment, so it makes sense if you make sure not to pay the mortgage is more than you need. If you pay the lender standard variable rate (SVR), for example, there is a good chance you can save money by shopping around.
Approach your current lender first to see what they can offer you. After all, you may not need to move your mortgage to another lender to achieve a better deal. Then, have a look at the deals currently on offer from other lenders and, if you see an attractive rate, contact the relevant lender for a decision in principle.
If you decide to switch provider, contact your existing lender for a redemption statement so that you know exactly how much is required to redeem your existing mortgage. You can also check any fees that may be charged to bring that arrangement to a close. You will need a solicitor or licensed conveyancer to handle the legal work and you can either appoint your own or use a firm recommended by your new lender or broker.
A remortgage can be a way to free up some cash for home improvements or debt consolidation. Consider the current value of your home and the level of repayment that's affordable. Remember, if you are increasing your mortgage to consolidate debts, it will cost you more in the long term to pay back a loan over, say, 25 years rather than 5.
When you're shopping around, bear in mind that many of the best deals are aimed at homeowners with a lower loan to value ratio or LTV. For example, if your home is worth £200,000 and your mortgage amount is £150,000, you have a loan to value ratio of 75% so should qualify for a lender's best available rate. A higher loan to value could incur higher lending charges, so make sure you receive all the relevant information upfront.
What type of mortgage?
The first choice you need to make is between an interest-only mortgage, repayment mortgage, or combination of the two.
Interest-only
With an interest-only mortgage, you are repaying the interest on your loan, not the actual loan amount. If you opt for an interest-only mortgage, it is very important that you set up a suitable investment plan to build up enough money to repay the loan at the end of the mortgage term. If you originally took out an endowment mortgage, there's a chance that your investment may not perform as expected, so you should consider additional investments, such as ISA's, to make sure you don't end up with a shortfall.
Repayment
A repayment mortgage means that you are paying off some of your mortgage loan amount every month, so at the end of the mortgage term you will not have a balance to repay. Repayment mortgages tend to cost more in monthly payments, but if these are affordable to you then a repayment mortgage could be the answer.
Some people combine a repayment mortgage with an interest-only element so that the balance to repay at the end of the mortgage term is reduced.
Now for the low-down on the types of mortgage product on the market:
Standard Variable Rate (SVR)
A standard variable rate is linked to, but not the same as, the Bank of England interest or 'base' rate. Lenders tend to alter their SVR's as the Bank of England moves its rate up and down, but they are not obliged to do so or pass on the whole rate change.
Fixed
A straightforward concept, a fixed rate mortgage means the rate does not change as long as the fixed rate term is in force. The fixed rate term is typically 2, 3 or 5 years but some lenders will fix for longer. At the end of the fixed rate period, the interest rate charged will revert to the lender's SVR.
Tracker
A tracker mortgage follows the base rate, so if the Bank of England rate rises or falls by 1%, then your mortgage interest rate will do exactly the same. Tracker rates tend to be between 0.5% and 1% higher than the Bank of England base rate, and some of these products have a 'collar', which is a minimum level below which your interest rate will not go.
Discount
A discount mortgage is usually a rate that is discounted from a lender's standard variable rate (SVR). These discounts usually last for an initial period, e.g. 2 years, after which the rate will revert to the lender's SVR.
Cash Back
A cash back mortgage is precisely that - on completion of the mortgage, your lender will pay a percentage of the amount borrowed 'back' to you as a lump sum. Do bear in mind that the higher the cash back amount, the greater and more complex the number of strings likely to be attached to the mortgage, so make sure you understand all aspects of the product.
Capped
A capped rate mortgage could be for you if you want to know the most you will ever have to pay each month for your mortgage, but at the same time you benefit by paying less if interest rates fall. The loan has a maximum interest rate over which you will not be charged for a set period. However, lenders usually set a higher rate for a capped mortgage over, say, 3 years, than they would charge on a fixed rate for the same period.
Offset
In principle, an offset mortgage works by using savings to cancel out mortgage debt. There are two basic types of offset deal, a current account mortgage (CAM) which links a homeowners current account with their mortgage so they see one statement and one balance, and an offset mortgage where the deposits are kept in separate accounts but linked for the purpose of interest calculation. With both types of offset, borrowers usually make a regular monthly repayment.
Buy to Let
Buying property to rent out is very popular in the UK and buy-to-let mortgages cater for this specific purpose. The type of mortgage deal on offer varies from fixed rates to trackers, and lenders will normally require a deposit of at least 15%. Rates are usually higher for Buy to Let mortgages.
Whatever you choose, remember to check any early repayment charges that may apply if you want to move your mortgage again. You should also consider arrangement fees, valuation fees, legal costs and higher lending charges when you're assessing which deal is best for you.
Read the Key Facts Illustration for your chosen mortgage - this will tell you everything you need to know to make a decision about your mortgage.
If you are using a broker, make sure you're aware of any additional fees that you may be asked to pay.
Finally, ensure you have adequate buildings and contents insurance (you are not obliged to purchase this from your lender).
You may also want to consider Mortgage Payment Protection Insurance which should cover your monthly mortgage payments if you have an accident or become ill and are unable to work, however certain conditions and restrictions apply.
Source:http://www.teachersbs.co.uk/news/articles/11-01-31/Guide_to_Remortgaging.aspx
we know that most people in this world think that the mortgage payment is the primary financial commitment, so it makes sense if you make sure not to pay the mortgage is more than you need. If you pay the lender standard variable rate (SVR), for example, there is a good chance you can save money by shopping around.
Approach your current lender first to see what they can offer you. After all, you may not need to move your mortgage to another lender to achieve a better deal. Then, have a look at the deals currently on offer from other lenders and, if you see an attractive rate, contact the relevant lender for a decision in principle.
If you decide to switch provider, contact your existing lender for a redemption statement so that you know exactly how much is required to redeem your existing mortgage. You can also check any fees that may be charged to bring that arrangement to a close. You will need a solicitor or licensed conveyancer to handle the legal work and you can either appoint your own or use a firm recommended by your new lender or broker.
A remortgage can be a way to free up some cash for home improvements or debt consolidation. Consider the current value of your home and the level of repayment that's affordable. Remember, if you are increasing your mortgage to consolidate debts, it will cost you more in the long term to pay back a loan over, say, 25 years rather than 5.
When you're shopping around, bear in mind that many of the best deals are aimed at homeowners with a lower loan to value ratio or LTV. For example, if your home is worth £200,000 and your mortgage amount is £150,000, you have a loan to value ratio of 75% so should qualify for a lender's best available rate. A higher loan to value could incur higher lending charges, so make sure you receive all the relevant information upfront.
What type of mortgage?
The first choice you need to make is between an interest-only mortgage, repayment mortgage, or combination of the two.
Interest-only
With an interest-only mortgage, you are repaying the interest on your loan, not the actual loan amount. If you opt for an interest-only mortgage, it is very important that you set up a suitable investment plan to build up enough money to repay the loan at the end of the mortgage term. If you originally took out an endowment mortgage, there's a chance that your investment may not perform as expected, so you should consider additional investments, such as ISA's, to make sure you don't end up with a shortfall.
Repayment
A repayment mortgage means that you are paying off some of your mortgage loan amount every month, so at the end of the mortgage term you will not have a balance to repay. Repayment mortgages tend to cost more in monthly payments, but if these are affordable to you then a repayment mortgage could be the answer.
Some people combine a repayment mortgage with an interest-only element so that the balance to repay at the end of the mortgage term is reduced.
Now for the low-down on the types of mortgage product on the market:
Standard Variable Rate (SVR)
A standard variable rate is linked to, but not the same as, the Bank of England interest or 'base' rate. Lenders tend to alter their SVR's as the Bank of England moves its rate up and down, but they are not obliged to do so or pass on the whole rate change.
Fixed
A straightforward concept, a fixed rate mortgage means the rate does not change as long as the fixed rate term is in force. The fixed rate term is typically 2, 3 or 5 years but some lenders will fix for longer. At the end of the fixed rate period, the interest rate charged will revert to the lender's SVR.
Tracker
A tracker mortgage follows the base rate, so if the Bank of England rate rises or falls by 1%, then your mortgage interest rate will do exactly the same. Tracker rates tend to be between 0.5% and 1% higher than the Bank of England base rate, and some of these products have a 'collar', which is a minimum level below which your interest rate will not go.
Discount
A discount mortgage is usually a rate that is discounted from a lender's standard variable rate (SVR). These discounts usually last for an initial period, e.g. 2 years, after which the rate will revert to the lender's SVR.
Cash Back
A cash back mortgage is precisely that - on completion of the mortgage, your lender will pay a percentage of the amount borrowed 'back' to you as a lump sum. Do bear in mind that the higher the cash back amount, the greater and more complex the number of strings likely to be attached to the mortgage, so make sure you understand all aspects of the product.
Capped
A capped rate mortgage could be for you if you want to know the most you will ever have to pay each month for your mortgage, but at the same time you benefit by paying less if interest rates fall. The loan has a maximum interest rate over which you will not be charged for a set period. However, lenders usually set a higher rate for a capped mortgage over, say, 3 years, than they would charge on a fixed rate for the same period.
Offset
In principle, an offset mortgage works by using savings to cancel out mortgage debt. There are two basic types of offset deal, a current account mortgage (CAM) which links a homeowners current account with their mortgage so they see one statement and one balance, and an offset mortgage where the deposits are kept in separate accounts but linked for the purpose of interest calculation. With both types of offset, borrowers usually make a regular monthly repayment.
Buy to Let
Buying property to rent out is very popular in the UK and buy-to-let mortgages cater for this specific purpose. The type of mortgage deal on offer varies from fixed rates to trackers, and lenders will normally require a deposit of at least 15%. Rates are usually higher for Buy to Let mortgages.
Whatever you choose, remember to check any early repayment charges that may apply if you want to move your mortgage again. You should also consider arrangement fees, valuation fees, legal costs and higher lending charges when you're assessing which deal is best for you.
Read the Key Facts Illustration for your chosen mortgage - this will tell you everything you need to know to make a decision about your mortgage.
If you are using a broker, make sure you're aware of any additional fees that you may be asked to pay.
Finally, ensure you have adequate buildings and contents insurance (you are not obliged to purchase this from your lender).
You may also want to consider Mortgage Payment Protection Insurance which should cover your monthly mortgage payments if you have an accident or become ill and are unable to work, however certain conditions and restrictions apply.
Source:http://www.teachersbs.co.uk/news/articles/11-01-31/Guide_to_Remortgaging.aspx
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