You may find that going into the mortgage journey will prove to be rather fruitful. It can have both its ups and it’s downs, though regardless, you will end up with one potential outcome once your term ends.
You’ll either have a home that you have been able to settle down in, an initial property that you can use to propel yourself up to a better property, or a property that you can invest in to boost your income.
No matter which route you went down, you’ll eventually reach the point where your term comes to a close and you’ll need to look at your options. Some people look to sell their home and upsize/downsize into a new property.
Others may sell their portfolio to the tenant or another buyer, with a view to look alternative ventures. However, we mostly find that people choose instead to Remortgage their home.
First of all, let’s take a look at what a Remortgage actually is. A Remortgage is basically where you take out a new mortgage to pay off a mortgage that you already have. There are a wide variety of different options when taking out a Remortgage, some of which are minor, others of which are major.
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.
The mortgage deal that you start on will typically last around 2-5 years and feature low fixed rates, with the rates potentially discounted. Sometimes though you may find that you’ve been placed onto a tracker mortgage, which will follow along with the Bank of England’s base rate.
Once your term comes to an end, it’s likely that you will be put onto the lenders Standard Variable Rate (this may be shortened to SVR). To explain what this is, an SVR is a mortgage that has an interest rate that may change depending on the amount that your lender wants to charge for it.
The Standard Variable Rate will not follow the Bank of England’s base rate like you would see with a tracker mortgage.
Because of this, SVR’s are generally perceived to be the most expensive paths that customers could take, leaving many to instead take a look at Remortgaging to open themselves up to better rates, something which may hopefully save you money on future monthly mortgage repayments.
Once you’ve gotten about 2-5 years into being a homeowner, you may feel like something needs to changed. Some people might want an extra room or much more living space, possibly a new kitchen, a new office to work from home in, or even a new loft conversion.
Rather than find a bigger home to move into, a lot of homeowners instead look at releasing their equity with a Remortgage, so that they can cover the costs of home improvements.
Obtaining planning permission and both funding and managing your own project can seem quite stressful. Some other homeowners would say that it is less stressful and a lot more rewarding than it would be trying to get a new home, selling your current home and moving everything between properties.
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 how much the property is worth, which is useful if you ever decide you want to sell your property or make it a rental.
Sometimes you’ll find that people are looking to Remortgage in Leeds so that they can gain access to a better mortgage term, whether this be achieved by reducing the length of the term or switching to a more flexible mortgage product.
By reducing your terms length you’ll be cutting short how long you pay back your mortgage for, so aren’t tied down, though it does mean that your monthly repayments will be higher. The longer you set your term for, the lower your payments will be.
Some homeowners may choose to take out a more flexible mortgage term when they look to remortgage. They may do this due to the amount of benefits they may have for doing so.
In having this mortgage, you may be able to overpay, meaning you could pay your mortgage off a lot quicker, as well as being able to take the same mortgage and rates with you across to another property, if you ever do decide to move.
You might feel like a flexible mortgage sounds near perfect, though they 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 some may think is unreliable.
Everyone will have some amount 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 worth.
As talked about before, 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.
Occasionally, we see Buy-to-Let landlords using Equity Release as a way to cover their deposit for buying any future property portfolio additions.
Whilst speaking of Equity Release, we also find that there are a lot of people who will pay off any unsecured debts that you may have gained over time.
Though it may seem like a really straightforward process, Debt Consolidation not only factors in the amount that you owe for your debts and how much the property is worth, but also the state of your credit rating. This means the amount you could borrow is limited.
On top of this, 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 much higher. Though it isn’t great, at least you know there are some options should these problems arise.
If you have a damaged credit rating, there are still options out there for you, though these aren’t easy and require very Specialist Remortgage Advice in Leeds before you go ahead with these. Even with those options, you’re not guaranteed to get a mortgage.
It is always recommended that you get mortgage advice before you look to consolidate and secure any debts against your home.
If your mortgage term is coming to an end and you would like to learn more about your Remortgage options, we definitely recommend getting in touch with an experienced Mortgage Broker in Leeds and booking your free mortgage appointment.
A dedicated mortgage advisor will take a look at your situation and look at your future goals, in order to help you to determine the next step of your mortgage journey. We aim to ensure that your mortgage process this time around is a lot smoother and quicker than it was before.