Getting a remortgage deal
When looking to remortgage you may be wondering where you can potentially find the best remortgage deals. If you will be able to get any remortgage deals with bad credit? If the remortgage deals available to others may be available to you if you are now self-employed? And how much equity you may need in your home to get the best remortgage deals?
In this brief guide, we will cover the questions above and provide information that may help you in finding the right remortgage deal for your needs.
When considering a remortgage, you may want to consider using a mortgage broker who may be able to assess remortgage deals which are not available to you on the open market.
Can you remortgage to borrow more?
Yes, remortgaging to borrow more is known as getting a further advance if done with the same mortgage lender but if it is done with a different mortgage lender it is simply known as additional borrowing.
Remortgaging to borrow more money is very common. You may be extracting some equity from your property in the form of cash which you may want to use for home improvements or whatever is agreed between you and the mortgage lender.
The mortgage lender will usually like to see that you have at least 5% equity in your home before they offer you a remortgage to borrow more money.
If you had earlier put in a sizeable mortgage deposit in your property when you took out your initial mortgage then remortgaging to borrow more could simply be accessing that mortgage deposit and reducing the amount of equity you own in your property in exchange for more borrowing.
You may want to seek the help of a mortgage broker when considering to remortgage for more borrowing.
Reasons for releasing equity from your home
When remortgaging the mortgage lender may ask you for reasons as to why you want to release some of the equity you have built up in your home through your mortgage deposit or through your monthly mortgage repayments.
Some of the reasons for releasing equity in your home could be
Buying a new car
For home improvements
A family holiday
To pay off your debts
To use as a mortgage deposit
You may still be able to get a good remortgage deal even when you release equity from your home through a remortgage.
How to get the best remortgage deals with bad credit
When looking to get a remortgage deal, bad credit could, of course, affect your eligibility for a remortgage deal but your remortgage application with bad credit will usually be done on a case by case basis by different mortgage lenders.
Some mortgage lenders may offer you a remortgage deal with bad credit and others won’t.
In the case of a bankruptcy, some mortgage lenders may be willing to offer you a remortgage if the bankruptcy has been discharged more than 12 months ago. Some other mortgage lenders will want the bankruptcy to have been discharged for at least 24 months whilst other mortgage lenders will not offer you any remortgage deals at all due to the bad credit.
Different mortgage lenders look at bad credit in their own way but usually, this is based on their lending criteria. If you find that you have been declined for a remortgage deal because you didn’t meet the mortgage lenders mortgage affordability requirements then don’t be too worried there may still be remortgage deals which you may be eligible for from other mortgage lenders.
You may want to see the help of a bad credit mortgage broker when considering remortgaging.
When considering remortgage deals bad credit may include:
A debt management plan
A home reposession
How to get a remortgage deal with Little equity?
If you have little equity in your property you may be wondering if you will qualify for a remortgage. The short answer is yes. Remortgages are not simply to extract equity from your property or to use the equity in your property to get you a better loan to value and hence a better rate. You could still remortgage a property and be eligible for different remortgage deals with little equity.
You may have just finished a fixed-rate term deal and want to reduce your monthly mortgage repayments by getting a remortgage deal which has a better rate and therein offers you lower monthly mortgage repayments. In this case, you can simply start the remortgage process and complete your remortgage with little equity as long as you meet the mortgage lenders other eligibility requirements..
How to get a remortgage deal as a self-employed borrower?
If you are a self-employed borrower you may think getting a remortgage would be hard but this may not necessarily be the case as you may still be able to get a remortgage.
Most remortgage lenders will consider your repayment behaviour on your current mortgage, your credit score and history and your financial data to see if you will be eligible for a remortgage deal with them.
The mortgage lender may ask for your:
Your bank statements.
You may want to consider using a self-employed borrower when seeking a remortgage deal.
How to get a remortgage deal as an older borrower?
If you are an older borrower then getting a remortgage deal may really depend on when you retire or turn 75.
Most mortgage lenders will like to see the mortgage term end by the time you are 75.
There are however some specialist mortgage lenders out there that will offer a remortgage to borrowers who are approaching 75 or borrowers who their mortgage terms will end when they are above 75 if the borrower can prove that they may be able to continue making the mortgage repayments through their pension income or other savings.
If you are unable to get a standard remortgage then you may be able to get an equity release product or a retirement interest-only mortgage.
You may want to seek independent financial advice from a mortgage broker before taking out these products as an alternative to a remortgage deal.
How to get remortgage deals with a high loan to value?
You may certainly be able to get a remortgage deal with a high loan to value through a further advance or simply because the equity you have in your property isn’t significant.
As long as you can prove to the mortgage lender that you will be able to continue making the mortgage repayments on your new mortgage you may be able to get a remortgage deal with a high loan to value.
Some mortgage lenders may even offer a remortgage deal with a loan to value as high as 90% under the right circumstances.
Typically to qualify for such remortgage deals you will need a good credit score and a good income so you are able to pass the mortgage lenders mortgage multiple assessment.
The loan to value amount for your remortgage will depend on how much equity you have in the property.
If you have 40% equity then you may be eligible for a 60% loan to value remortgage deal at the minimum but you may be able to get more and even as much as 100% LTV depending on the circumstances.
Can I get a 100% LTV remortgage deal?
Getting a 100% loan to value remortgage deal may very well be possible under the right circumstances.
To get a 100% loan to value remortgage deal you may need to put down collateral or have a guarantor as 100% loan to value remortgage deals may be harder to come by. The mortgage rates on a 100% loan to value mortgage may also not be competitive.
Can I get a 95% LTV remortgage deal?
Getting a 95% loan to value remortgage deal may be much more possible than getting a 100% LTV remortgage deal.
95% remortgage deals are much more common and your mortgage lender may be offering this.
Ensure you compare your mortgage options properly to ensure you are remortgaging to a better deal rather than remortgaging for the sake of remortgaging.
You will want to consider the remortgage fees, remortgage benefits & perks, the remortgage rates and take into account any early repayment charges that may be due on your current mortgage.
Can I get a 90% LTV remortgage deal?
Yes, you may be able to get a 90% LTV remortgage deal. This means you will have 10% of the equity in your property left after the remortgage.
90% remortgage deals may be more common than 95%v LTV remortgages. This means there may be way more products on the market for you to choose from.
You may want to use a mortgage broker who could provide suitable advice on getting a 90% LTV remortgage deal.
Can I get an 85% LTV remortgage deal?
Yes, you may be able to get an 85% LTV remortgage deal. This means you will have 15% of the equity in your property left after the remortgage.
85% remortgage deals may be more common than 95% LTV remortgages. This means there may be way more products on the market for you to choose from.
You may want to use a mortgage broker who could provide suitable advice on getting an 85% LTV remortgage deal.
When getting an 85%vLTV remortgage deal you may find many mortgage lenders may offer longer fixed-rate deals and more competitive rates. This is due to the fact that an 85% LTV remortgage deal is a loan to value rate at which many mortgage lenders may want to lend at.
Can I get an 80% LTV remortgage deal?
Yes, you may be able to get an 80% LTV remortgage deal. This means you will have 20% of the equity in your property left after the remortgage.
80% remortgage deals may be more common than 100% LTV remortgages. This means there may be way more products on the market for you to choose from.
You may want to use a mortgage broker who could provide suitable advice on getting an 80% LTV remortgage deal.
When getting an 80% LTV remortgage deal you may find many mortgage lenders may offer longer fixed-rate deals and more competitive rates. This is due to the fact that an 80% LTV remortgage deal is a loan to value rate at which many mortgage lenders may want to lend at.
You can certainly remortgage to an offset mortgage if you meet the mortgage affordability requirements of an offset mortgage lender.
If you have enough savings then this could be a good way to reduce the interest cost of your current mortgage.
An offset mortgage is a mortgage which allows you to place your savings in a linked bank account. These savings are subtracted from the mortgage balance and interest is charged on the difference. This means you can reduce the balance at which interest is charged on your mortgage by having your savings in a linked bank account.
You are still able to withdraw these funds whenever you want but this may affect how much balance interest is charged on.
You may be able to withdraw the funds and replace them before your interest is due to be charged but this will depend on the charging cycle of your mortgage and you should check this with your mortgage lender as it may simply be abusing the system.
You may want to consider if simply overpaying your mortgage after remortgaging to a cheaper remortgage deal may be a better use of your savings than getting an offset mortgage.
In some cases, the linked bank account could also earn interest on your savings which will bring further reduction in the overall cost of your mortgage.
How to get the best remortgage deal at the end of a fixed-rate mortgage?
Many homeowners will get to the end of their fixed-rate mortgage and wonder how they could potentially get the best remortgage deal.
In truth, it all depends on your circumstances and mortgage affordability
Where to get the best remortgage deals?
Most mortgage lenders will offer the best remortgage deals to a borrower who is currently mortgaged with them. Deals including free legal packs etc are very commonplace but if you need more complicated legal work such as a transfer of property equity then you may need to find your own conveyancer to process your remortgage.
When looking at remortgage deals you should try and quantify the value of the deal or perks being offered to see if you are being offered a good deal.
Mortgage lenders may also offer great remortgage deals to mortgage clubs or mortgage packagers in a bid to encourage more borrowers to apply through this route and reduce the costs they face when processing mortgage applications which may not be eligible for a mortgage with them.
How to remortgage to the best deals
To find the best remortgage deal you can check comparison websites and remortgage deal calculators which may be able to provide you with an indication of the remortgage deals you may be eligible for.
You should know that these remortgage deal calculators and comparison websites are not always accurate and don’t necessarily take into account your personal circumstances which may affect your ability to get a remortgage deal.
These remortgage deals may not also take into account the main features of your current mortgage such as the early repayment charge.
The remortgage deals which are presented on the websites and calculators may also not be available to every borrower.
They will also usually not represent all the mortgage lenders out there and so they are not termed as “whole of market”. You may be able to use a whole of market mortgage broker to try to find you the best remortgage deals available to you based on your circumstances and current mortgage.
Some of the best remortgage deals may also only be available through mortgage brokers, mortgage clubs and mortgage packagers.
The best remortgage deal available to you may actually be with your current mortgage lender.
How to find the best-fixed rate remortgage deals
Finding the best-fixed rate remortgage deals may be much easier but finding the best-fixed rate mortgage deal which suits your situation may be much harder.
When considering a fixed rate remortgage deal you always want to consider what the bank of England’s base rate may be doing in the future. This may be very hard to do if you have no economic experience or aren’t economically savvy.
If the bank of Englands base rate seems like it is going to rise then getting a fixed rate remortgage deal for much longer maybe the best way to go about it but on the other hand if the bank of Englands base rate seems like it is going to fall, then getting a shorter fixed rate remortgage deal may be the best outcome.
Your future plans will also affect how long of a fixed rate remortgage deal you may want to get. If you plan to move out of the home soon then getting a fixed rate remortgage deal may not be the best thing to do as a fixed rate remortgage deal may usually contain high early repayment charges.
You may be able to get a:
2 year fixed remortgage deal
This is a very short fixed rate remortgage deal and this means you will move on to the mortgage lenders standard variable rate mortgage pretty quickly. A 2 years fixed rate remortgage deal may be ideal if you expect interest rates to fall soon.
5 year fixed remortgage deal
A five years fixed rate remortgage deal may be ideal if you want some stability but want an option to move mortgages after 5 years to a cheaper mortgage. It may also be a good option if you think the bank of England’s base rate is going to rise and want some stability.
10 year fixed remortgage deal
A 10 year fixed rate remortgage deal is the deal you get if you want stability and are not concerned if the bank of England’s base rate rises or falls as you feel you are on a good deal regardless. The early repayment charge on a 10 year fixed remortgage deal will likely be very high.
Remortgage deals calculator
A remortgage calculator may be able to help you compare the best remortgage deals available to you. These calculators are usually provided by comparison sites or mortgage brokers. They will usually provide you with the monthly mortgage repayment you may be expected to make after completing on the remortgage deal, the total amount payable to the mortgage lender, the total interest cost of the remortgage, any fees applied to the remortgage and the perks offered by the remortgage lender.
Remortgage calculators are good but they miss out one vital thing: your early repayment charges(if any) with your current mortgage lender.
Without taking this into account its hard to say if a remortgage will be worth your time in regards to how much savings you could make or not.
You should speak to an independent whole of market mortgage broker who may be able to access your mortgage affordability in more detail.
Use a mortgage broker for your mortgage in principle
You may want to use an independent mortgage broker to help you get a mortgage on your new home.
Mortgage brokers are important as they can access mortgage products from across the whole of the market in some cases.
This could be over 11,000 mortgage products. This may have some advantages rather than going directly to a mortgage lender.
A mortgage broker will look to understand your financial circumstances and then provide recommendations on which mortgage products may be suitable for you based on your mortgage affordability.
After giving you these mortgage recommendations, most mortgage brokers will seek your consent to apply for a mortgage in principle.
This will allow you to shop for your home as more estate agents and sellers may take you seriously and it will also give you confidence that your mortgage is indeed a possibility before you make a full mortgage application.
Once you have found a home you want to buy and are satisfied with the mortgage offer for your mortgage then the mortgage broker will then look to get you a mortgage offer.
This will come with a key facts illustration document that details the features of your mortgage including how much you will pay per month.
It will also contain information on if there are any limits such as early repayment fees, or annual overpayment limits.
If you are happy with everything you can then go on to secure your mortgage with the help of a conveyancer.
Your conveyancer will manage the legal searches on the property to ensure there aren’t any issues with it.
They will oversee the sales agreement to ensure it is in your best interest, they will manage the transfer of mortgage funds, exchange contracts with the seller or their conveyancer, and set a completion date with the seller or their conveyancer.
This will then bring an end to the conveyancing process, at which point you will receive the keys to the house and move in.
If you need financial advice and you live in the UK then you could contact the Money Advice service over the phone or via chat for impartial advice.
You can also contact the debt charity “Step Change” if you are in debt and need help.