07 Feb 9 guidelines to Remortgaging Your London Property
There are numerous benefits in taking out a new mortgage on your London property to either replace your existing mortgage, or to borrow money against your property. This can include reducing your monthly mortgage repayments, pay off your mortgage earlier, or release equity; and of course, find a much a better deal. Here are 8 guidelines to Remortgaging for London property owners.
Your home may be repossessed if you do not keep up repayments on your mortgage or any other debt secured on it.
The Value of Your Property Has Increased
Many London property owners have seen that rising demand has increased the value of their property over recent years (https://data.london.gov.uk/housingmarket/). This might mean that your mortgage is no longer the most suitable option available as you could be eligible for much lower rates as you will now be in a lower loan-to-value band.
Reduce your mortgage term
With rates so low at the moment (http://www.bankofengland.co.uk/) there is potential to accelerate the speed at which you are paying off your loan. If your loan is flexible and you’re in the financial position to do so, it is possible to shorten your mortgage by overpaying. The advantages of overpaying is that you can stop it any time you wish to do so, but just be aware that some lenders will automatically reduce your monthly payment rather than the term – so it is best to meet with your lender to discuss the options.
There are a wide range of options available, so it’s a matter of considering the pros and cons to see what option suits your needs best. Fixed-Rate Mortgages can be a great option for people who like the security of having the same repayment to make each month without any fluctuation. This option is more expensive than variable deals, and can also mean that if national interest rates were to drop, you wouldn’t be able to benefit from a reduction in repayments. Variable Rate Mortgages such as Trackers, Standard Variable Rate (SVR) and Discount Rate options are typically lower than fixed rate mortgages, but are likely to be effected by the Bank of England base rate so there is an element of risk involved. …
Repayments are calculated to go towards paying off interest first, and the debt of the loan second. Many people worry that remortgaging to another deal will only draw out the period in which the interest part of the loan is being paid, making it hard to eventually pay off the debt part of the loan. However, this isn’t the case so long as the debt amount and years to repay are kept the same as the original mortgage.
Make sure you have a good credit rating before remortgaging. You can do this by ensuring that you pay off debts timely, are enrolled on the Electoral Roll, stay out of your overdraft and keep other applications (phone plans, credit cards, loans etc.) to a minimum in the months before applying to remortgage. You can also check your credit rating with sites such as Experian, Callcredit, Equifax, amongst others.
What’s Left Each Month
Before remortgaging, it’s important to work out how much room you have after you’ve made repayments each month. If you’re in a strong financial position, then the more comfortable lenders will be with approving your loan application. It’s important to note that since the economic crisis, mortgage regulators have set strict rules to ensure lenders check that a borrower can afford the mortgage.
Is it important for you to find a mortgage that enables you to increase or decrease what you pay as your circumstances change? By having a mortgage that allows you to make overpayments, you can potentially clear your debt much quicker which means that you’ll pay less interest overall. You might also want to be able to pause your payments for a month or two. This would obviously mean that your missed repayments will be spread over the life of the loan making your future repayments go up, so many lenders will prefer you that you’ve overpaid before allowing a repayment ‘holiday’ –this option is particularly suitable for peoples whose income is commission based or irregular.
Raise Money on Low Rates
If you find that your current lender has refused a loan, or the terms offered aren’t as good as you expected – then remortgaging to a new lender could be away to raise money cheaply in comparison to other forms of borrowing.
Mortgage Brokers are well placed to help you find the right deal for you. Brokers can quickly source the relevant mortgage that fits your needs, taking into account your credit history making the application process much quicker – and hassle free. Brokers can also have access to exclusive broker-only deals which are not accessible to individual customers.