Your mortgage journey can be a fruitful one for many. If you are able to proceed, though there may be ups and downs, you will inevitably always end up with one of a few potential outcomes.
Those outcomes are either a home for you to settle down in, a starter property to later push you up the property ladder or an investment property with a view to provide you with an additional income.
Regardless of the route of which you took, you will eventually find yourself at a point where you need to consider what to do next. A selection of homeowners will sell their home to upsize or downsize into a new home.
Other property owners may instead sell their portfolio to either a tenant or another property buyer. The most common occurrence we see, however, is people looking to remortgage their home or property.
The first step here is to review what a remortgage actually is. In the simplest way to describe it, a remortgage is the process of replacing your current mortgage with a new mortgage, for a desired purpose. These range from smaller options to larger ones.
By using over two decades of mortgage industry knowledge from the “Moneyman” himself, Malcolm Davidson (host of our YouTube channel MoneymanTV), we put together a useful Remortgage guide for those looking at what they can do next, when their term nears its end.
When you start your mortgage deal, you’ll more than likely choose to run for 2-5 years, with low fixed rates and the rates potentially discounted. From time to time though, you could find yourself on a tracker mortgage, with interest following the Bank of England base rate.
Once your deal has ended, it is very likely you will find yourself on the mortgage lenders Standard Variable Rate (SVR). An SVR is a type of mortgage that has an interest rate set by the mortgage lender. This can fluctuate at any time, depending on what they want to charge for it.
Because an SVR will not be following the BoE base rate and are set at mortgage lender discretion, they tend to be much more expensive and can lead to many customers remortgaging to find a better rate of interest. Hopefully, this will save you money down the line.
Once you have gotten to the point of being around 2-5 years into your home owning journey, you may feel like you want a change. Perhaps you need more space, an extra bedroom, a kitchen refurbishment, a room or loft conversion.
Rather than finding a much bigger home to move into, many homeowners will look instead at releasing some of their equity that is in their home, through a remortgage, as a means to cover the costs of the home improvements they intend to make.
Obtaining planning permission and both funding and managing your own project can sometimes be a little stressful, though some would debate that it’s less stressful than selling a home, buying a new one and moving everything you own.
In the long run, you may be able to reap even more benefits, as opening up lots of space within the property and having a top level of craftsmanship will very likely increase the value of the property, which is useful if you ever decide you want to sell your property or let it out instead.
Sometimes you’ll find that people are looking to remortgage in Leeds as a means of gaining access to a better mortgage term, whether they want to reduce the length of the term they have or perhaps switch onto one that is more flexible.
By reducing the length of your term, you won’t be paying back your mortgage for as long, though it will more than likely mean that your monthly mortgage repayments will go up. The longer your term, the lower your mortgage payments will be.
A lot of homeowners choose to take out a more flexible mortgage term when they look to remortgage. They may do this due to the amount of benefits that are present for these types of mortgages and their holders.
In having this mortgage, you may be able to overpay, meaning you could pay your mortgage off much quicker, as well as being able to take the same mortgage and rates with you across to another property, if moving ever becomes something you’d like to achieve.
Though flexible mortgages seem perfect to some, they also tend to be tracker mortgages, which as we said before will follow the Bank of England base rate. This means your payments could differ depending on interest, which can be a little unreliable for some people.
Every homeowner has some level of equity existing within their property. The amount can be worked out by looking at the difference between what is left on the mortgage and how much the property is currently valued at.
As we have said, the equity can be used for home improvements, though you can use it for more than that too. Some use their equity to cover long-term care costs, to boost their income, to go on holiday, to pay off an interest-only mortgage or to just give them some spare money to spend.
From time to time we even see buy to let landlords using a remortgage to release equity as a way to cover their deposit for buying any future property portfolio additions they wish to own.
If you are aged 55+ and own a home that is valued at a minimum of £70,000, it may be worth your time looking at your options for equity release in Leeds. Book online and speak with a qualified later life mortgage advisor to learn more about later life mortgages.
On the topic of releasing equity, we also find that there are a lot of people who will pay off any unsecured debts that you may have gathered against your name over time.
Though it can seem initially like a really simple process, debt consolidation will not only factor how much you owe, but the value of your property and also your credit rating. This means that you might not be able to borrow as much as you would like.
Additionally, in order to pay off your previous mortgage and your debts, you need to borrow a much higher amount than your mortgage, making your monthly repayments incredibly high. Though it isn’t the best of options, at least you know there is something you could do, should these problems arise.
If you have a damaged credit rating, there are still a selection of options out there for you, though these aren’t easy and more often than not, require very specialist remortgage advice in Leeds before you proceed. Even with those options, nobody is guaranteed to successfully obtain a mortgage.
You should think carefully before securing other debts against your home. By adding your unsecured debts to your mortgage, which is secured on your home, you are potentially putting your home at risk if you cannot make the required repayments.
Although the total monthly cost of servicing your debt may have reduced, the total cost of repayment may still have risen as the term of your mortgage is longer than it may have taken to repay the debts originally.
If your mortgage deal is reaching its conclusion and you would like to understand your options more in-depth regarding a remortgage in Leeds, book your free mortgage appointment and speak with an expert mortgage broker in Leeds today.
A trusted and experienced mortgage advisor in Leeds will review your situation and what else you would like to achieve in the future, as a means of determining the next step of your home owning journey. This time around, we aim to make your process go quicker and smoother than the first time.
Last edited 02/12/2022