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Remortgages & Second Charges
A remortgage is the process of switching your existing mortgage to a new lender, either to save money on monthly payments, to release equity in your property, or to switch to a more suitable mortgage deal.
There are several reasons why homeowners may consider remortgaging. For example, they may want to secure a lower interest rate, consolidate debts, raise additional funds, or switch to a more flexible mortgage product.
At Your Best Interests our goal is to help you whatever your needs, be it to save money, release equity, or find a more suitable mortgage deal to fit your changing circumstances. With our help, you can make an informed decision and achieve your financial goals.
Will the banks need to do a full assessment on me when I Remortgage?
In short yes, when you remortgage, whether with a new lender or staying with your current lender, the lender will need to assess your financial situation, credit status, and property value to determine your affordability and how much you could borrow. This is to ensure that you can comfortably afford the new mortgage payments and that the property provides sufficient security for the loan.
We will help you prepare for the assessment process and ensure that you have all the necessary documentation in place.
Can I ask for a bigger mortgage when I Remortgage?
Yes, when you remortgage, you have the opportunity to apply for a bigger mortgage if you wish to do so. This means that you could potentially release equity in your property and increase your borrowing amount.
However, whether you are eligible for a bigger mortgage will depend on your personal circumstances and affordability. The lender will assess your income, expenses, credit score, and property value to determine how much you can afford to borrow. If your circumstances have improved since you took out your original mortgage, such as an increase in income or a rise in property value, then you may be able to access a larger mortgage.
Benefits of remortgaging
Remortgaging can offer a range of benefits, including:
1
Lower Monthly Payments
By remortgaging to a new deal with a lower interest rate, you could potentially reduce your monthly mortgage payments, freeing up more cash for other expenses or savings.
2
Access to Better Mortgage Deals
If your current mortgage deal is coming to an end, you may be able to find a better deal elsewhere, with more competitive interest rates, better terms, or additional features such as overpayments or cashback.
3
Releasing Equity
If you've built up equity in your home, you could potentially release this through a remortgage, allowing you to access cash for home improvements, debt consolidation, or other purposes.
4
Consolidating Debt
Remortgaging can also be a way to consolidate other debts, such as credit card balances or personal loans, into your mortgage, which may offer a lower interest rate and reduce your overall monthly payments.
5
Changing Mortgage Type
Remortgaging can also allow you to switch from a variable rate mortgage to a fixed rate, or vice versa, depending on your preference and financial circumstances.
What is a second charge?
A second charge is a type of secured loan that is taken out against a property that already has a mortgage on it. It allows homeowners to borrow additional funds using the equity in their property as collateral, without having to remortgage or change their existing mortgage deal.
The second charge is a separate legal charge on the property, with the lender having the right to repossess the property if the borrower defaults on their repayments. The loan is typically used for large expenses such as home improvements, debt consolidation, or to finance a major purchase.
The amount that can be borrowed with a second charge loan depends on the amount of equity in the property, as well as the your income, credit history, and other financial circumstances. It's important to note that taking out a second charge loan will increase the overall debt secured against the property, and will result in higher monthly payments.
What is the difference between a Remortgage and a second charge?
A remortgage and a second charge are two different ways of borrowing against the equity in a property.
A remortgage involves paying off the existing mortgage and taking out a new mortgage with either the same or a different lender. This is often done to take advantage of better interest rates or to release equity from the property. With a remortgage, the borrower essentially replaces their existing mortgage with a new one.
On the other hand, a second charge loan involves taking out an additional loan against the equity in the property, while keeping the existing mortgage in place. The second charge loan is secured against the property, just like the original mortgage, and you will make separate payments on both loans.
The key difference between a remortgage and a second charge loan is that with a remortgage, you replace your existing mortgage with a new one, while with a second charge loan, you take out an additional loan against the equity in the property. The choice between the two will depend on your individual financial circumstances and needs.
At Your Best Interests, we can help you explore your options for both remortgages and second charge loans, and provide expert advice to help you make an informed decision on the best course of action for your individual needs.
Why would I want a 2nd charge instead of a Remortgage?
There are several reasons why you might consider getting a second charge loan instead of remortgaging:
1
Avoidance of Early Repayment Charges
If you have an existing mortgage with an early repayment charge, taking out a second charge loan may be a cheaper option than remortgaging, as you can avoid paying these fees.
2
Better Interest Rates
If you have a good mortgage deal that you don't want to lose, taking out a second charge loan may be more cost-effective than remortgaging, as you may be able to get a better interest rate than you would on a new mortgage.
3
Faster Access to Funds
If you need funds quickly, a second charge loan may be a better option than remortgaging, as the process is generally faster and requires less paperwork.
However, it's important to note that second charge loans typically have higher interest rates than remortgaging, so it's important to weigh the pros and cons of both options before making a decision.