Your complete guide to Remortgages
Take a read at important topics written by Remortgage Brokers.
Our Remortgage guide details all you need to know about Remortgaging your Residential or Buy to let Property.
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- Remortgage explained
- Is it important to remortgage
- Equity is your strongest asset
- What is debt consolidation?
- Should i debt consolidate
- Remortgage with no extra borrowing – straight forward remortgage
- Product transfer – remortgage with the same lender
- Remortgaging with bad credit
- Buy to let remortgage
- Day one remortgage
- Unencumbered remortgage
- Lenders criteria on unencumbered remortgage
- Remortgage an inherited property
- How to remortgage
- Best remortgage deal for me?
- Repayment, Interest only, Part and Part options
- Fixed vs. Tracker rates
- 2 year & 5 year products – lend more over 5 years
- Remortgage costs and fees
- What documents & details are needed for my remortgage application?
- When not to remortgage my property
- Protecting your home
- Speak to a broker
Bad credit mortgage brokers often help people who are remortgaging when their deal with their current mortgage lender is coming to an end. This would mean the deal you had for 2,3, or 5 years will no longer stand and you will soon be going onto the mortgage lenders standard variable rate. Going onto the standard rate is lot higher than your current rate which in turn will mean your monthly payments will increase.
In some instances customers will stay with their current lenders to get another product rate (deal). However not all lenders offer better rates or terms to the loan, especially if you are looking to borrow more money or you have a change of circumstances (credit issues, income changes, missed mortgage payments). Bad credit mortgage brokers will introduce you to industry experts to help you find the best deal tailored to your situation.
IS IT IMPORTANT TO REMORTGAGE?
When taking out a mortgage you often have it for a period of 2/3/5yrs depending on what deal you choose. In mortgage terms, this is quite a long time and you will see many changes over this period. Rates can be better or new lenders can come into the market offering better terms than what you currently have. Not only that, many clients decided they borrow more money but their current lender are not offering favourable terms. That’s why remortgaging can allow you the flexibility to borrow and have better options based on your circumstances. Not all clients can remortgage but Bad Credit Mortgage brokers match industry specialist who have whole of market products that can find a lender to suit your specific circumstances.
- Lower Rates -
- Capital Raising -
Lenders criteria on acceptable and not acceptable reasons for capital raising
Home Improvements – from basic touch ups to heavy refurbishments
Repayment of Gambling debts
Purchase an investment property or second home – Buy to let or holiday home
Injection of capital into a business
Gifted Deposit - Raising money to give to family towards their home deposit
Start-up of a new business
Clear debts- personal loans, credit cards, CCJ’s and Legal and Tax bills
Purchase of timeshare
Divorce and separation – can be used to fund divorce proceedings and maintenance
Payment of Tax Bills ( there are some acceptations)
Other Personal purchases – Weddings, Private Medical surgery, school fees.
To Purchase Stocks and Shares as lenders deem it too risky
EQUITY IS YOUR STRONGEST ASSET
The amount between the mortgage and the value of the house is called Equity. House Value £150k and mortgage £100k therefore your equity is £50k. When remortgaging to a different lender or staying with your current mortgage company, they will use your equity as your deposit to offer you a mortgage product. So the more you pay towards your mortgage it will increase your equity in the property.
WHAT IS DEBT CONSOLIDATION?
The purpose of debt consolidation is to combine all outstanding debts into one simple monthly payment which is affordable and easily managed. Credit Card and Loans are mainly short term lending and interest rates tend to be higher, meaning monthly payments can be a lot more.
SHOULD I DEBT CONSOLIDATE?
Clients can sometimes miss manage their finances and borrow too much on credit cards and loans to find themselves over spending and failing to pay back the interest. Credit Cards can have very high rates which can be a costly option of borrowing money. If you are considering debt consolidation it is important to refrain from further borrowing as this will amount to more debts in the future. Debt consolidation can cost more when adding to your mortgage. Bad Credit Mortgage Brokers would like to point out that any debt consolidation must be considered carefully because even though your payments are affordable, you are paying back more over the longer term of the mortgage. It is also secured against your property and if you fail to keep up payments your property could be repossessed.
REMORTGAGE WITH NO EXTRA BORROWING
A Like for like remortgage is for clients who don’t want to borrow extra money on their mortgage and prefer a straight switch into another product. Bad Credit Mortgage Brokers can introduce a mortgage advisor to help you process this option. The remortgage experts can either get a better deal with your current lender (Product Transfer) or a find better rate with another mortgage lender. In some instances clients tend to reduce the mortgage term so they have less years to pay on the mortgage and save on paying back interest.
PRODUCT TRANSFER – REMORTGAGE WITH THE SAME LENDER
Product transfer is when clients deal with their current lender is running out and they transfer into a different product with the same lender. Whilst this can be the best option for some it is not always right for others as each individual applications have different circumstances. Product transfers can be less hassle, very little paperwork and in most cases a lot cheaper and quicker for the clients.
REMORTGAGING WITH BAD CREDIT
Bad Credit Mortgage Brokers introduce industry experts with a whole of market system to allow clients exclusive deals which are offered daily by specialist lenders. So no matter how complex your credit problems if you can provide the right information to the experts they can find the mortgage product to match your needs. A Whole of market system allows the advisors to search for a wide variety of lenders and products giving you more chances of getting a mortgage.
- Credit report -
- Bad Credit Mortgage Table -
|0 – 6 Months||7 – 12 Months||1 – 2 Years||2 – 3 Years||3- 4 Years||+4 Years|
|Late Payments (personal loans / credit cards / store cards/ other unsecured credit)||Maximum of 2 missed payments allowed on each credit commitment||YES( No Maximum)||YES( No Maximum)||YES( No Maximum)||YES( No Maximum)||YES( No Maximum)|
|Missed Rent Payments (First Time Buyer)||No||YES( 3 Maximum)||YES( No Maximum)||YES( No Maximum)||YES( No Maximum)||YES( No Maximum)|
|CCJ (County Court Judgement)||No||YES (Subject to amount)||YES ( if 36 MONTHS ago will ignore)||YES||YES||YES|
|Defaults||Help to Buy Only (Subject to lenders discretion)||YES (Subject to LTV)||YES (Subject to LTV)||YES||YES||YES|
|Debt Management Plan / Debt Arrangement plan||Yes||Yes||Yes||YES||YES||YES|
|IVA||No||Very Unlikely||Help To Buy Only (Subject to lenders discretion)||Achievable but high deposit needed||YES||YES|
|Bankruptcy||No||Very Unlikely||Help To Buy Only (Subject to lenders discretion)||Achievable but high deposit needed||Achievable with good deposit||Achievable with good deposit|
|Pay Day Loans||No||No||0 In last 12 months All outstanding loans to be cleared||Yes||Yes||Yes|
Buy to Let Remortgage
Like residential remortgaging, Buy To Let mortgage products have particular timescales of when their deals running out. So its important landlords review them to get a better interest rate or product. Bad Credit Mortgage Brokers match industry specialists to get you the best deals to help Landlords make more of their investment. Please see our comprehensive guide on BUY TO LET MORTGAGES for everything you need to know about buy to let mortgages.
Capital rising for buy to let mortgages will be subjected to the rental income and not your own personal income. Speak to a remortgage expert who can advise you if your rental income fits the lenders rental calculations and see how much you can capital raise.
DAY ONE REMORTGAGE
Day one remortgages are mainly done, when someone has purchased a property for cash (like in an auction), inherited a property or come to the conclusion that they need more money to carry out work on the property they have just bought. Lenders over the years have stipulated that you cannot remortgage before 6 to 12 months of the purchase. However, Bad Credit Mortgage Brokers use advisors who have access to specialist lenders that are happy to remortgage from day 1. Giving you the customer more flexibility to finish work on the house or remortgage your inherited property.
LET TO BUY REMORTGAGE
- Renting out your current home to buy a new home to live in.
These terms are often used when a home owner is deciding to purchase a new property but wants to keep their current home to rent out. Homeowners tend to remortgage to borrow more money from their current home to use as their deposits for the new purchase. When remortgaging all lenders are now asking proof of a new purchase if you’re current residential home is being put onto a BTL mortgage product.
Lenders are happy to consider this as long as the home owner is moving into the new property and must provide onward purchase details. If you decide to do this, simultaneous mortgage applications will occur, one for a let to buy and one for the new residential purchase. This provides proof of onwards purchase and BTL lenders will only accept when the new residential mortgage is offered. Our Buy to let mortgage experts have knowledge and understanding to make sure both mortgages are offered around the same time so it can be a smooth transition.
In the mortgage world the term ‘Unencumbered’ means ‘mortgage free’. This usually means you have either paid off all your mortgage or purchased the property outright with cash.
An unencumbered remortgage is a term the lenders use for a remortgage on a mortgage free homes. People who have an unencumbered property may want to remortgage for several reasons. You may want to raise capital and release equity for home improvements, to gift cash to family members. Or to purchase an investment property. You may also want to move house but keep your current residential property to rent out, this is called a Let to buy.
LENDERS CRITERIA ON UNENCUMBERED RE-MORTGAGE
Technically speaking, a remortgage is when an existing mortgage you have is replaced with a new one. As your home is mortgage-free, lenders can’t technically remortgage your home. The process and procedure for getting a mortgage is same for unencumbered Properties. Although please be aware some lenders will still regard this as either a remortgage or as a new purchase. Owning an unencumbered property you will have a range of options available in terms of lenders and rates.
If you’ve purchased a property wholly with cash or have paid off your mortgage completely, this shows most lenders that you’re financially secure and apply for a new mortgage should be an effortless process. Enquire today at bad credit mortgage brokers and we will introduce you to a remortgage expert for your tailored quotes and advice.
REMORTGAGE AN INHERITED PROPERTY
You may have recently inherited a property from a family member and wondering what options you have when it comes to Re-mortgaging. You may want to remortgage the inherited property to raise capital, so it can help you purchase your own home, whilst letting out the property you have inherited. This remortgage is called a Let to buy or a Regulated Buy to Let, this means it is regulated and protected by the FCA rules and guidelines, giving you more protection.
If you have inherited the property and it currently has a residential mortgage outstanding, you would need to take out a Consumer Buy to let mortgage in your personal name, if you want to rent it out.
If you have inherited a Property that has Buy to let Mortgage outstanding, you would still need to put it in your own name. There will be favourable rates available to you
Speaking to a remortgage expert can access you the best rates available in the current market, saving you time and money.
HOW TO REMORTGAGE
People often remortgage when their current is coming to an end, this is when Bad Credit Mortgage Brokers can help assign you an adviser who can assess your current situation and find the best solutions for you to move forward with. This can either be with your current lender or finding a better mortgage product with another company.
An easy and straightforward process to follow:
- Fill in our Mortgage enquiry form
Our specialist brokers are independent and whole of market which gives you great advantage of getting the best deals on the mortgage market. More importantly our specialist brokers often get exclusive deals from lenders which is why you can be assured the brokers will find the right deal for you.
- Let an Advisors do all the work – SIMPLE
The Specialist brokers will come back with a quote based on the information you have provided. Once you are happy and have understood the terms of the mortgage product the specialist brokers can move to Decision in principle and then the application stage.
BEST REMORTGAGE DEAL FOR ME?
REPAYMENT OR INTEREST ONLY OPTIONS
When taking a Re-mortgage for residential or Buy to Let purposes there are two payment options to choose from Repayment or Interest Only.
Repayment option is the most advised payment option for residential mortgages and has been since the credit crunch. For Buy to let Mortgages however Interest Only is the most common clients take out.
- Repayment Mortgage (Capital & Interest) -
- Interest only -
- Part and Part -
FIXED VS. TRACKER RATES
- Fixed Rate -
- Tracker Rate -
Example – Bank of England Base rate 0.1% and the lender would offer a rate of 0.9% above base so your total interest rate is 1% a month
2 YEAR & 5 YEAR PRODUCTS – LEND MORE OVER 5 YEARS AND WHY?
When Bad Credit mortgage brokers introduce you to a Remortgage advisor they will find mortgage lenders who will initially offer deals which are between 2yrs to 5yrs. The mortgage companies offer these deals to keep you as a client for this particular duration. With these deals, lenders will offer lower rates with higher products costs or vice versa. However clients who choose a 5yr fixed have a little more flexibility from the lenders because you will be a client for a longer period. This will be in the form of lower costs or flexibility in borrowing more money.
It is important to point out whilst locked into these 2 year or 5 year deals, if you wanted to come out from the deals there would be a penalty called ‘Early Repayment Charaging’. These can be quite costly but not to worry because Remortgage experts will explain all the information so you can make an informed decision before choosing.
REMORTGAGE COSTS AND FEES
When you are Remortgaging your property, there will be costs involved. Below is a table of to illustrate the main upfront costs that we want to make you aware, so there are no surprises for you when applying for your Remortgage. A specialist Remortgage Broker will explain and make sure you are completely aware and happy of all the costs involved before applying for your mortgage.
The Lenders will charge an Arrangement fee for taking out the mortgage.
This Arrangement Fee can be added to the loan. Please be aware if the
Arrangement fee is added to the loan the monthly payments might increase.
The amount of Equity you have in your property and want to
put down towards the mortgage.
The lenders will charge a valuation fee of around
£200 - £350 Depending on the house valuation.
The valuation fee will be explain and outlined on the mortgage quote
given to you by your specialist broker. Some Lenders have a free
valuation for Remortgages.
Between from £995 - £1495 for Residential or Buy To Let Remortgaging.
Ask your Remortgage Expert broker for a referral or you can use your
A Lenders mandatory requirement when taking out a Remortgage.
Your Remortgage expert broker can help you with you home insurance.
WHAT DOCUMENTS & DETAILS ARE NEEDED FOR MY REMORTGAGE APPLICATION?
Free, Quick & Easy, No credit check
- Proof of ID -
Non-European citizens must provide passport and residency card / visa. Visa must have another 2 years remaining. Non-European citizens also must have lived
In the UK for 3yrs or have indefinite leave to remain.
- Proof of address -
3 Months Payslips or 12 weeks (if paid weekly)
- Last Year’s P60 -
- 3 months
- Latest P60
- SA302’S AND TAX YEAR OVERVIEW -
- Existing Mortgage Details -
- Latest personal 3 months bank statements -
Bank statements Criteria- lenders now request all bank statements to meet the following criteria:
- A full 3 months – This must not have any pages missing and they require the statements to be from the 1st of the month to the end. So if up the application is on 01/04/2020, then back dated from 01/01/2020 to 31/03/2020.
- Identifiable to you or partner (if joint bank account) – must have your name(s), address, account number and bank name on statement.
- Online statements – must have identifiable information and ideally the web URL on the bottom. Bank prints – must have identifiable information and a branch stamp and signature, ideally on every page
- 3 Months Business bank statement (Self Employed) -
- 3 years Business Accounts -
- Solicitor details -
LET TO BUY REMORTGAGE
- Estate agent details:
- New property details:
WHEN NOT TO REMORTGAGE MY PROPERTY
- Expensive Early Repayment Charge -
- Your mortgage loan is really low -
- Your house value has dropped considerably -
PROTECTING YOUR HOME!
- Home insurance -
The Buildings insurance covers the actual bricks and mortar of your property including fixtures and fittings, you’ll need to have buildings insurance in place before you exchange contracts.
The contents insurance covers your possessions in your home, in event of theft, loss or damage and including fires or floods, although content insurance is not a requirement by the mortgage lenders, but most people opt to add contents insurance as well.
- Life insurance -
SPEAK TO A SPECIALIST BROKER
If you looking to remortgage your home to capital raise for home improvements, to purchase another property, Debt Consolidation or if you think you may have some credit issues that an affect your application
There is no need to worry, you can speak to a specialist mortgage adviser, it is important that you get the correct advice and support.
A specialist Remortgage adviser who has whole of market knowledge and products can help you find the right mortgage for you, saving you time and money.
Free, Quick & Easy, No credit check
The information written is a relevant and comprehensive guide for visitors to read about the mortgage industry. The information collated is based on current mortgage lending criteria and polices. We endeavour to keep the website up to date but the information may vary from time to time as lenders change their criteria based on evolving financial climate. Please be aware the information and guidance written is not specific to an individual and does not constitute advice or guarantee a mortgage. The industry experts we introduce are qualifiedto give mortgage advice and are regulated by Financial Conduct Authority. All advice given by the advisors will be based on your specific requirements and circumstances.Your Home may be repossessed if you do not keep up repayments on your mortgage. Thinkcarefully before you secure any debts against your property. The Financial Conduct Authority does not regulate some forms of buy to let mortgages.