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Remortgage for a better rate

You might have mortgaged your property for a secured loan and you have borrowed to buy your home. And you might have heard about remortgaging and are interested in learning more; we’re here to help you understand what it means. A remortgage is a process where you switch from one mortgage product to another; the new agreement can be with same or a different lender. It will mean new terms and conditions for the loan and repaying your original mortgage in full.

Remortgaging is often confused with releasing equity but sometimes people decide to remortgage simply to achieve a better interest rate. When remortgaging you normally keep the loan for the duration of the agreed term of the product before you can switch from one lender agreement to another. The ‘product term’ means you are bound to the agreement for the specific period of time and should you wish to repay the mortgage before the product term is up you will be required to pay an Early Repayment Charge (ERC).

Within about 4 months of the end of the product term you may wish to source a new remortgage product and as many products do change daily, it’s vital that careful selection is carried out before committing to a new one as many have fees that not immediately clear.

Once or within say 4 months of the end of the product term it is wish to source a new product as many product change daily, careful selection is vital many product have fees which are not clear.

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Frequently Ask Questions

We at Remortgage Professionals have many different remortgaging deals to fit your requirements. Remortgaging with a new lender may increase your chances of achieving a higher property values as well as a lower interest rate.

Equity is the difference between the actual market price of a property and the pending mortgage value. For instance, if your home has valued at £90,000.00 and your pending mortgage value is £55,000.00 then the equity value is £35,000.00 and the Loan to Value (LTV) is 61.1%, which is the percentage of pending mortgage to the total value of the property

You may have paid more than half of the mortgage amount on your home and might want to buy a new house and are considering a remortgage to do this; before this can happen we need to confirm whether you are remortgaging to buy a house for your extended family or kids or if you are buying as an investment or to rent out to tenants. If you want it for your kids or extended family then you can remortgage your current property to pay the up-front payment or to pay some initial expenses.

However, if you are planning to buy for investment purposes and you want to let it out to tenants than you can’t remortgage your residential property as this would be considered a commercial property; a residential property cannot be remortgaged for commercial purposes.

In order to remortgage your current property you must have paid off some of the original loan, for example if you own a house and its value is £100k and you made an initial payment of £10K and took a loan for £90k, but a couple of years later, you have only repaid £2k and the value of your house has increased by £1k this means that the value of the house is £110k and your pending mortgage is £70k. At this point the equity value is the difference between the value of your home and a pending mortgage which in the case of the above example will be £40k.

 

So, you can remortgage your home to get the additional £40k and if remortgaging to release the equity, you can remortgage part of the equity as well, which means you can borrow £20k or £30k of £40k

If you are self-employed then getting a loan would be harder, but it’s not an impossible task. Agreed it was easy to borrow money in previous years but now it is quite a cumbersome process. If you need a loan and you are a businessman, freelancer or self-employed then you need to show proof that your income is stable.  Lenders will want to see your tax returns, bank account statements as well as an income report along with any kind of cash deposits ; if you have these then your rating will be higher than self-employed borrowers without such evidence.

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