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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.
Take advantage of historically low interest rates.
Current bank of England base rate 0.1%

REMORTGAGE EXPLAINED

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 -
Getting a better rate is always an attraction to remortgage and Bad Credit Mortgage Brokers introduce advisors who have daily updates of the best rates on the market. From high street lenders to specialist banks. They can offer deals which are sometimes exclusive and often more cost effective for customers.

  • Capital Raising -
There can be several reasons people want to borrow more money when they remortgage. Clients want to change something in their home or build an extension so asking to borrow more seems the best option on a mortgage. Borrowing the extra with the mortgage allows them to have lower rates than getting a personal loan from the bank. Payments will be manageable and more importantly affordable.

Lenders criteria on acceptable and not acceptable reasons for capital raising

Acceptable

Not Acceptable

  • 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 -
    Your advisor recommended by Bad Credit mortgage brokers will request your credit report as this is very important when assessing what mortgage product and lenders they can source for you. It gives your Remortgage advisor the opportunity to look at your credit history to identify in detail what and when the issues occurred. The detailed report is needed as different mortgage lenders have different criteria and product depending on the history of the bad credit.

    • Bad Credit Mortgage Table -
    Below is a table to show as a guide of one of the current mortgage lenders criteria. Their criteria show what types of credit issues can be accept and when have those credit issues have been registered. For example if you have had a default registered against you over 7 months ago you can be accepted for a mortgage. Enquire today at bad credit mortgage brokers to see what lenders and rates are available to you, we promise to match you with an industry expert who knows whole of market knowledge of specialist lenders who will accept clients who want to remortgage with bad credit.

    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.


    UNENCUMBERED REMORTGAGE

    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) -
    When taking out this method of payment, you are paying the capital and interest on the mortgage. This will pay the mortgage at the end of the term. Paying off the capital and the interest is normally a lot more expensive and due to this customers would spread there payment over a very long term to make them affordable. These terms could rise to 25 years up to 40 years depending on the client’s eligibility.

    • Interest only -
    This payment option only pays back the interest charged for the Loan you have borrowed. The amount owed will stay the same at the end of your particular deal or term. It is important to note the amount borrowed will always be the same on interest only and you would need to make sure how you will pay the loan at the end of the term. Customers take out this payment method because it is cheaper and affordable. Customers tend to go onto this type of payment for a number of years until their circumstances are a lot better and their disposable income is higher. However many lenders will only offer this option to residential customers if they have large a deposit or equity in their property. BTL Landlords tend to go for this option which again is explained in more detail in our BUY TO LET MORTGAGE GUIDE.

    • Part and Part -
    A part and part mortgage is when a client is looking to pay some of the mortgage on a repayment (capitaland interest) basis and some on interest only. Whilst not all lenders offer this option, there are a growing number of them who are happy to accept this option depending on the client’scircumstances. Not everyone will be offered this option so it’simportantto speak to a specialistadviser who can explain in more detail.

    FIXED VS. TRACKER RATES

    • Fixed Rate -
    A fixed rate mortgage is when you payments are fixed for a certain period and your payment will not go up or down during this time. The payment option helps clients budget and manage their mortgage comfortably knowing what they have to pay each month without worrying about interest rate movements. A fixed rate mortgage is the most popular rate people go for when taking out a mortgage.

    • Tracker Rate -
    This rate tracks the Bank of England (B.O.E) base rate. Your interest payment is normally above the B.O.E rate. If the Bank of England decide to move the rates up or down your payments will go up or down with it. The Bank of England meet each month to discuss whether to move the interest rates up or down its important to note your payments will fluctuate each month depending on B.O.E movements.

    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.

    Arrangement Fee

    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.

    EQUITY

    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.

    VALUATION FEE

    SOLICITORS FEES

    Between from £995 - £1495 for Residential or Buy To Let Remortgaging.
    Ask your Remortgage Expert broker for a referral or you can use your
    own solicitors.

    HOME INSURANCE

    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?

    bad-credit-document bad-credit-document bad-credit-document bad-credit-document bad-credit-document
    bad-credit-document bad-credit-document bad-credit-document bad-credit-document bad-credit-document

    Free, Quick & Easy, No credit check

    • Proof of ID -
    A Valid passport or driving licence showing your full name and date of birth,
    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 -
    These documents must be dated in last 3 months: utility bill (gas electric, water bill, council tax, TV Licence, credit card statement and driving licence. It’s important to point out no lenders accept mobile phone bills.

    3 Months Payslips or 12 weeks (if paid weekly)

    • Last Year’s P60 -
    Sometimes the lender will request this.

    • 3 months
    Recent Payslips or 12 weeks if paid weekly

    • Latest P60
    (some lenders will require this)

    • SA302’S AND TAX YEAR OVERVIEW -
    (min 3 years or how long you have been trading)

    • Existing Mortgage Details -
    Details of your current mortgage lender, rate, monthly payments, and term remaining. Some lenders will require your current mortgage statement.

    • Latest personal 3 months bank statements -
    For ALL active accounts, our specialist brokers will need to show the lenders your daily and weekly spending and your salary going into your account. So if you have two or more bank accounts please provide based on the above info
    Bank statements Criteria- lenders now request all bank statements to meet the following criteria:
    1. 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.
    2. Identifiable to you or partner (if joint bank account) – must have your name(s), address, account number and bank name on statement.
    3. 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) -
    Whilst the lenders does not always require this the more information our broker has they can speed up your application process.

    • 3 years Business Accounts -
    ( Self Employed Applicants only, not all lenders will request)

    • Solicitor details -
    Name of solicitor, name of acting solicitor, email address , phone number With any mortgage transaction you will need a solicitor / conveyancer. They are the legal entity who help customers conduct searches on the property and comply with the instructions of the mortgage company when the offer is produced. They request the money from the lenders and distribute to the seller or mortgage lender depending on a purchase or remortgage application.

    LET TO BUY REMORTGAGE

    • Estate agent details:
    name, address, email, contact number for valuation, again providing this to the broker will allow them to process your application efficiently.

    • New property details:
    address, construction material, approximate year of build, detachment type, garage or number of parking spaces, number of bedrooms/bathrooms/kitchens/other rooms. The details can be very important when applying for a mortgage as for example there are certain restrictions with lenders accepting particular construction property types, certain flats in high rises, or floor space which means details such as these can affect the application process and so the more our specialist brokers know about the property the greater chances they have of getting the right lender and having your mortgage approved.


    WHEN NOT TO REMORTGAGE MY PROPERTY

    • Expensive Early Repayment Charge -
    If you are locked into a fixed term deal, you usual have to pay an Early Repayment Charge (ECR) to exit your current mortgage. These ERC charges can be expensive, so it best to see if exiting your current mortgage lender will be beneficial to you.

    • Your mortgage loan is really low -
    if you have currently have a low or little loan left to pay back to the lender, it can sometimes be costly to remortgage your home, unless you want to capital raise. As some lenders may not offer you the best competitive rates have a minimum loan amount. Speaking to a Remortgage expert we can find lenders who are have a flexible approach to lending with this criteria.

    • Your house value has dropped considerably -
    as the market is forever changing and due to the recent events of the coronavirus, you may find the housing market has dipped, as a consequence of this, house prices could have reduced. This could mean that your equity in your property has reduced. Although this estimation can vary from post code to post code.


    PROTECTING YOUR HOME!

    • Home insurance -
    Lenders require you must take this out prior to your mortgage completion. Home insurance is slip into two categories, Buildings and Contents 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 -
    Nobody knows what lies ahead of us or want to think the unthinkable, but if the unthinkable happens and we take precautions. Life insurance is very important in protecting your loved ones and protecting your home and mortgage from unforeseen events. The life insurance will help pay for funeral costs, your mortgage and other financial costs.


    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


    FCA disclaimer

    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.