Why Should I Bother To Remortgage?

Reasons to Remortgage and Improve Your Home

Remortgaging can help you to save money every month, and be a good way to get a lump sum of money, instead of taking out a personal loan.

What is a remortgage?

A remortgage is when you take out another mortgage on your home to replace your current loan or to borrow extra money against your property.

Why would you want to remortgage?

You would remortgage a property to either raise or save money:

Raise money

You can raise money by releasing equity in your home and taking out a new mortgage that is larger than your existing one. You could do this to consolidate debts, make home improvements or fund something else in your life.

Save money

You could save money by remortgaging and switching to a cheaper mortgage provider. You will need to check the terms of your contract though to make sure you aren’t charged any early exit fees.

How could you improve your home?

If you can release equity in your property, you can use these funds to improve your home and potentially increase its value. You may be able to build an extension, make repairs or update a property to raise its market worth.

 

This could prove to be a sound investment in the long-term, but we’d advise you seek expert advice before deciding to borrow money against your home.

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What are the risks of remortgaging?

When you remortgage for a larger amount than your property is worth, you are borrowing more money against your home. If you borrow money and do not keep up with the agreed repayments, your home could be at risk.

If you feel you cannot commit to higher repayments than you are already on, we’d advise you consider remortgaging to release equity with caution.

When shouldn’t you remortgage?

You should not remortgage if your existing mortgage debt is small or if your property’s value has dropped. If your repayment charge is large or if you have little/negative equity in your property, we’d also advise you steer clear of remortgaging, as this won’t benefit you in the long run and could put you at a financial detriment.

Get advice today

If you are looking for expert advice on remortgaging your property, contact our team today. We will be happy to help advise you on what you can do to release equity and switch mortgage provider.

We are experts in offering solutions to people with bad credit and can help you if you need a helping hand with your next move. Visit www.clever-mortgages.co.uk today.

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Releasing equity from your home

What is equity release?
Equity release is a way to obtain money quickly by releasing it from the value of your property. You will lose ownership on a proportion of your property but will still be able to live in it. Read on to find out how to release equity in your home and see if it is the right option for you.

What is equity release?

Equity release is a way to obtain money quickly by releasing it from the value of your property. You will lose ownership on a proportion of your property but will still be able to live in it. Read on to find out how to release equity in your home and see if it is the right option for you.

Why should you release equity?

Equity release may be a suitable option for you if you are looking for immediate cash without having to leave your house. It may also be an option to consider if you don’t have many savings and do not intend to leave a large sum of money behind in your will.

We’d advise you speak to a specialist adviser before opting for equity release and make sure you fully understand the details of opting for this mortgage option. The interest rates on an equity release arrangement may be higher than a standard mortgage arrangement, so you should consider all options before agreeing to one.

How does equity release work?

There are a couple of equity release schemes available and you should consider all options carefully before committing to one. One of the following home equity release options may be suitable for you:

A Lifetime Mortgage is aimed at homeowners over 55 years old who are looking to borrow money and remain living in their property. If you choose this option, you will only need to pay your money back when you die or go into full-time care.

A Home Reversion Plan is suitable for people over 65 years old who are looking for a way to raise money. If you opt for this, you will sell your property in return for tax-free cash – between 20% and 60% of its market value – but can continue to live there. You then continue to live in your home as a tenant without paying rent, providing you keep the property well maintained and take out building insurance.

Equity release considerations

There are a few things to consider before opting for an equity release:

  • Your property will not immediately be handed over to your beneficiaries when you die. However, you can protect some of the property’s cash value to use as an inheritance.
  • If your circumstances change after agreeing to an equity release, you may not be able to rely on your property if you need money later on in your retirement for medical emergencies or other events.
  • You may find the benefits you are entitled to change after releasing equity from your home, as this will be viewed as a change in income.

Get advice today

If you are looking to release equity in your property and raise some much-needed cash, call one of our expert advisers today on 0800 197 0504 or visit https://www.clever-mortgages.co.uk/apply-for-a-mortgage/

Is now the time to remortgage?

Is now the time to remortgage?

At Clever Mortgages, we have access to the latest remortgage products from a wide range of lenders. With interest rates remaining low you could switch to a new mortgage product to save money by getting a lower rate.

There are also different types of mortgage to consider, such as a fixed rate, so you know what you’re paying each month. If the value of your home has increased, you could borrow more than the value of your mortgage to consolidate other debts or make important home improvements to increase the value of your home.

Continue reading “Is now the time to remortgage?”

The Best Ways To Fund Your Home Improvements

There’s a good chance that once you’re on the property ladder, you will want to put your own stamp on your house by making some home improvements. You might want a new kitchen or build an extension, whatever you want to do, you’ll most likely need to raise some capital in order to do it.

The best ways to fund your home improvements

In order to afford the improvements, or perhaps protect our savings, most of us will have to use some form of borrowing, but it can be difficult to establish the best option for you. The most popular options for funding home improvements are remortgaging or a home improvement second charge secured loan, but you can work out what is the best option for you.

Remortgaging or taking out a loan

There is a multitude of options available when it comes to funding your home improvements, you just need to decide which one is the best for you. It’s important to remember that when it comes to borrowing money against your home, if you don’t keep up the regular repayments, you could lose your home and it’s vital to bear this in mind when considering remortgages or a second mortgage.

Remortgage to fund home improvements

During the process of paying off your mortgage, it’s likely that you will have a substantial amount of equity tied up in the value of your property. A remortgage is a process of taking out another mortgage on your home, to replace your current mortgage or to borrow money against your property.

For example, if your existing mortgage has £150,000 outstanding and you want £20,000 for home improvements, you may be able to find a mortgage lender willing to lend you £170,000 which can be used to pay off the existing mortgage and fund the work on your home. It’s important to remember that in doing so, you would be increasing the amount of borrowing that is secured against your home and you’ll also need to make higher repayments over the full term of your mortgage. How high the repayments of your mortgage will be, is largely dependent on what proportion of your property value the mortgage represents, your Loan to Value (LTV) and other fees associated with remortgaging.

When remortgaging might not be the best option

Remortgaging a property might work well for some, but it may not be the best option for everyone, especially if:

-Your mortgage debt is small
-Your repayment charge is large
-You have little equity in the property
-Your home’s value has dropped

Second charge secured loan

A second charge secured loan is another option available to keep your existing mortgage intact. So rather than approaching your existing lender, you find another lender who is prepared to grant you a second mortgage.

Secured charge loans are aimed at homeowners that are unable to get a personal loan elsewhere due to a non-existent or bad credit rating. Secured loans also work well for homeowners that are looking to borrow significantly more than an unsecured or personal loan. You would need to make repayments on both mortgages at the same time, which may be over a longer period than a personal loan.

Similar to a further advance, this option also involves increasing the amount of borrowing that is secured against your home and the second charge loan may also be offered at a rate that is much higher than of your first charge mortgage, so it’s best to figure out whether you can afford it or not beforehand.

As your home is used as security for the debt, secured loans may allow you to borrow a larger amount of money with a lower interest rate in comparison to unsecured loans. However, lenders do consider secured loans to be a greater risk to borrowers than an ordinary bank loan.

As a mortgage broker, we specialise in finding great deals on mortgages. We can also compare secured loans from our different lenders to provide you with the most suitable loan.

A further advance from your mortgage lender

You could also get a further advance from your mortgage lender by approaching them and asking if they are prepared to lend you more money. You might do this if your existing mortgage deal is a good one, or if you have significant penalties for terminating your existing mortgage. It’s also important to remember that any advance would be secured against your home and you would still need to pay back the extra money. Also, the interest rate you are charged on the additional borrowing could be different to your existing mortgage rate.

Unsecured loan

If you don’t want to secure any additional borrowing against your home, you can take out an unsecured loan. To obtain an unsecured loan you could try approaching a bank or other lenders. These types of loans typically have repayment terms of up to five years and they also have fixed interest rates so it’s easier for you to plan your budget.

Credit card

If the cost of your home improvements isn’t too high, you could consider paying on your credit card. This could be an attractive option if you can obtain a low-interest rate or even a card with a 0% introductory rate. It’s worth noting however that many of these 0% rates are indeed, introductory. It’s important that you make any repayments before the promotional period ends at the rate subsequently increases.

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How to get the best remortgage deals

For the vast majority of us, our mortgage is the single largest financial commitment we’ll make. Whilst this is the greatest expense we’re likely to see in our lifetime, it also presents the greatest opportunity to make the biggest savings. Remortgaging is the process of switching your current mortgage to a new lender who can offer a better deal.

How to get the best remortgage deals

For the vast majority of us, our mortgage is the single largest financial commitment we’ll make. Whilst this is the greatest expense we’re likely to see in our lifetime, it also presents the greatest opportunity to make the biggest savings. Searching for the best remortgage deals can help you to find a better rate.

Remortgaging is the process of switching your current mortgage to a new lender who can offer a better deal. If you’re looking at remortgaging your property you should consider the following:

Affordability

The most important thing to consider when looking to remortgage is whether you can still afford the monthly payments. Lenders now apply stricter affordability checks than they once did. Some have found them difficult to pass, even for a cheaper deal than they are currently on.

Costs for leaving your current deal

Exit fees – also called a ‘deeds release fee’ or ‘admin charge’ – are a fee that you will usually have to pay for your current lender to forward on your title deeds to your solicitor. If you are leaving your current deal earlier than contracted then you might also be penalised with an Early Repayment Charge (ERC).

New mortgage costs

Even if remortaging results in lower monthly payments you will be required to make payments to take out the new mortgage. Most products require mortgage fees, which includes arrangement fees and a booking fee. Additionally, you will also have to pay a conveyancing fee, a broker fee and a valuation fee. If you’re unsure what these terms mean, referring to our Mortgage Jargon Buster might be useful.

Your credit score

Having a good credit score probably goes without saying when trying to get any kind of mortgage product. Unfortunately, if you’re suffering from bad credit then this isn’t something you can quickly fix. However, there are still mortgage brokers, including Clever Mortgages, who will help find you a remortgage deal if you have bad credit.

If you know you have bad credit then there are a number of ways you can increase your credit score for future borrowing.

The level of equity in your property

Much like a good deposit helps when you’re a first-time buyer, decent equity helps when you’re looking to remortgage. Unlike your deposit, however, the equity in your property will hopefully have grown over time with an increase in property values. This lowers the loan to value (LTV) of what you want to borrow, making you eligible for a better rate.

A valuation of your property can allow you to work out your house price and the level of equity you have within the property. Valuation fees are often included for free as part of your remortgage package, but you should make sure of this beforehand.

Which type of mortgage?

When comparing mortgages you should also look at the different types of mortgage available. Below is a guide to help you decide which option is right for you:

Interest-only mortgage These allow you to pay off only the interest on the amount you borrow. At the end of the mortgage term you use your savings or investments to pay off the remaining amount.
Capital repayment mortgage Where you gradually repay the money you have borrowed from your lender with added interest. This is paid back monthly over the mortgage term.
Fixed rate mortgage Where your interest rate stays the same for a set time period (usually between 2-10 years). This means that your repayments are exactly the same each month, regardless of what happens to mortgage rates.
Variable rate mortgage Where the interest rate goes up and down in line with the lenders Standard Variable Rate (SVR). This means that your payments can go up or down depending on the interest rate at that time.
Discount mortgage When a reduction is applied to the lenders Standard Variable Rate (SVR) for a set time period (typically 2-3 years), allowing you to make lower repayments during this time.
Tracker mortgage This is similar to a variable rate mortgage, where the interest rate can fluctuate. Rather than tracking the lenders SVR, they track a nominated interest rate. This is usually the Bank of England interest rate.
Capped mortgage This is the same as a variable rate mortgage but the interest rate can never rise above a set “cap”.
Offset mortgage These mortgages are linked to your savings account as well as your current account. Interest is only payable on your mortgage balance minus any savings balance.

Speak with a mortgage expert

If you need further advice on what you should be aware of when remortgaging, then one of the best options is to speak with a mortgage broker. Request a callback with a member of our team to speak with one of our mortgage advisers.

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What does the interest rate rise mean for you?

There’s been plenty in the news recently about interest rates rising for the first time in over 10 years. The Bank of England has raised the base rate from 0.25% to 0.5%. This means you could be paying roughly £200 more a year for every £100,000 you owe.

What does the interest rate rise mean for you?

There’s been plenty in the news recently about interest rates rising for the first time in over 10 years. The Bank of England has raised the base rate from 0.25% to 0.5%. This means you could be paying roughly £200 more a year for every £100,000 you owe.

Why has the interest rate increased?

The rise in the base rate is an attempt to lower inflation. Inflation is the general increase in prices for goods and services. A higher interest rate often works to reduce inflation as it encourages people to save rather than spend.

What does the interest rate rise mean for your mortgage?

Fixed Rate Mortgages

If you are on a fixed-rate mortgage, nothing will change – for now. However, when the time comes to review your current mortgage deal, there’s a chance your mortgage payments will increase on a like-for-like product. Most fixed rate deals are either 2 or 5 years, so depending on when you started with your current product, you may have some time to consider your options. You can make use of a mortgage calculator to understand what your new repayments will be once your current deal comes to an end.

Variable Rate Mortgages

Those on a variable rate mortgage are at greatest risk of seeing an immediate increase in their monthly mortgage payments; this accounts for around half the mortgaged population. If you’re on a Tracker mortgage, you will definitely see an increase in your payments. As the name suggests, a tracker mortgage ‘tracks’ the base rate and therefore rises and falls with it.

If you’re on a variable rate, it could be time for you to review your mortgage. You can get in touch with an adviser or even start the mortgage application process to make sure you’re on the best deal for you.

What about my savings?

Whilst yes, you will earn more on your savings, don’t expect it to outweigh the increase in your mortgage payments. If you have £10,000 in a cash ISA, you could expect your annual interest to rise by around £25.

Should I do anything?

It may not be a bad idea to get mortgage advice, particularly if you’re on a variable rate mortgage, as there could be a better, cheaper product for you to switch to. Mortgage brokers are often your best port of call. Unlike if you went to an individual lender, they only review their own range of products to find you the best deal.

Clever Mortgages can explore much further. We review an extensive range of options from different lenders to find the one you’re most comfortable with, so you can be sure of staying happy in your home.

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