Lee Griffiths
A list of the best remortgage articles, including debt consolidation remortgage, unencumbered remortgage, remortgage within 6 months, interest-only remortgages and remortgaging with bad credit.
How does a debt consolidation mortgage work?
The debt consolidation remortgage lender will want to check the following.
Credit profile
Income
Debts being consolidated
How much you need to borrow
New loan to value
Debt to income ratio
Reason for the debts
Most debt consolidation remortgage lenders will discount the current debts from affordability. There are some lenders who will still include the monthly commitments and very often this makes the new loan unaffordable. Speaking to one of our mortgage experts will ensure you are placed with the best lender for your circumstances.
The ultimate aim of a debt consolidation remortgage is to lower your monthly payments.
From big high street banks and building societies, to smaller more niche mortgage lenders, there is a lot of choice out there. This may feel completely overwhelming to you and you may have no idea where to start.
Can I remortgage with bad credit?
The simple answer is yes, dependent on the situation. This is where the use of a remortgage with bad credit expert will help.
1) Interest rates for bad credit mortgages are typically higher (due to being deemed higher risk), so choosing the right lender is vital to save time and money.
2) Most specialist lenders only accept applications from mortgage brokers, but not all bad credit mortgage brokers have access to the “Whole of the Market”, so it is vital you use a broker who does.
An unencumbered remortgage happens when you own a property outright with no mortgages or other secured debts on the property. This could arise from recently paying off the mortgage or buying a property outright such as at an auction.
You may now want to raise some capital from the property, which you can do so with an unencumbered remortgage. Homeowners may wish to remortgage an unencumbered property for a number of reasons, such as debt consolidation, home improvements, purchasing another property or capital raising for any legal purpose.
If you have recently purchased a property and need to remortgage within 6 months of purchase, you may be thinking what the best way is to do this. The situations where this might happen are.
Purchased property below market value
Property purchase at auction and now been renovated and increased the value
Property purchased with cash
Change in personal circumstances
Inherited properties
The new mortgage would be based on the current value of the property rather than the original purchase price, meaning that more equity can potentially be released from the property.
From big high street banks and building societies, to smaller more niche mortgage lenders, there is a lot of choice out there.
Are there benefits to an interest only mortgage? If so, what are they?
The main benefit is the lower monthly payment because you are only paying the interest amount. Always remember that the mortgage balance is going to remain the same with an interest only mortgage. Good advice would always be to pay extra off the mortgage, any extra payments will be used as capital repayments (reducing your mortgage balance)
There is always some financial uncertainty with interest only mortgages such as:
Property value at the end of the mortgage term.
Investments – what their current value is.
Housing market at the time.
Remortgaging your buy to let when your fixed/tracker rate period ends is vital as the difference in payments can be vast, with most lenders standard variable rates being 5% or above. Some lenders will allow you to do a product transfer directly, other lenders will only do this via a remortgage buy to let broker.
Property investors may also want to release equity, this can be for any reason, with the most common being for a deposit on another buy to let.
In the simplest terms, this is when your current residential property is changed to a buy-to-let mortgage and you purchase a new residential property. During this process, you can raise cash from your current property to use as a deposit for the new residential property, subject to having enough equity in the property. Let to buy mortgages are becoming increasingly more common.
Because you have lived in the property this now falls under consumer buy-to-let regulations, which means that the mortgage is regulated by the FCA.
Most lenders will want a simultaneous completion, with both properties to complete on the same day. There is however a let to buy mortgage lender who will allow you to raise funds before you purchase your new residential property allowing you to rent in the interim, this is where your mortgage expert will be able to advise you on the best way forward.
A product transfer is when you change products with your existing lender. This is the same as remortgage but staying with the same lender. Some clients are unaware of product transfers being an option.
If your circumstances have changed since you initial took out your mortgage, then this could be the best option for you.
Some lenders will allow you to do a product transfer directly with them, others are only available through a mortgage broker. If you product transfer directly with the lender this is an “unadvised sale” The best advice is to always speak to a product transfers mortgage advisor. The product transfers mortgage specialist will review your entire circumstances and advise on the best way forward.
You can remortgage with a sole trader mortgage. You might have been originally employed when taking out the mortgage and are now self employed. Our experts will be able to explain all the options available around sole trader mortgages.
If you aren’t eligible for a sole trade mortgage, then a product transfer might be the answer.
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