Mortgage Training Solutions

Through Remortgaging, it is possible to buy a second property, an arrangement we may refer to as remortgage buy second property. By second property it implies that you are most likely retaining your original home or property and so the second property may be used for commercial purposes. One of the ways you can do this is by releasing the equity you may have accumulated in your first home and with it, you will be able to remortgage and release enough funds to enable you buy the second home. However, if the equity in your current property is not sufficient enough, you can still go a head and take a new mortgage and use the money to buy the second home.

Important considerations
You need to consider what you intend to achieve from the second property. How do you plan to use it? If for example you want to buy the property so that you can rent it out, then in this case you will be better placed to go for a buy to let remortgage whose amount will depend on the income you expect to get from the property as opposed to your own income. It’s always advisable to give a deposit because it can entitle you to more beneficial deals. On the other hand, if you are purchasing the home for personal uses like holidays or partial residence, you will have to provide proven evidence to the lender that your income will be enough to sustain the monthly payments you will be required to make. Normally, there are several cases of customers who are interested in buying their second property abroad (homes in most instances). If you are such a customer, then the first thing you need to do is find a UK lender who deals with foreign properties and has options that will fit in your specifications. Alternatively, you can approach credible lenders in the country where you would want to buy your second home.

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By definition, equity is the amount of ownership value that is held by a homeowner in the property. The calculation of equity in a certain property is calculated by getting the difference between the outstanding loan balance and the fair market value of the property; and it increases with increase in payments made by the homeowner as well as increase in value of the property. The home owner will have 100 percent equity when all the outstanding payments are done including any fees that may have been attached. Equity is associated with LTV which stands for Loan-to-Value ratio, an expression of the value of the property compared to the amount of the loan.

Illustration: Let’s assume you took mortgage for a home worth £250,000 and made a £40,000 deposit using personal money; meaning the mortgage will cover the remaining £210,000. You will pay monthly repayments to the loan and perhaps after four years, you will have reduced the loan by £10,000 such that the outstanding mortgage loan is £200,000. During the four years, the value of your home has increased considerably and if you decide to sell it now, it can fetch you £280,000(all factors remaining constant). Subtracting the outstanding balance (£200,000) from the current value of the house (£280,000) we get £80,000 as your equity which you can now use as deposit for your next property.

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Releasing the equities is the prime aim of the olds to resort to the remortgage facility. Flushing out the extra equities that build up within your property over a good period of time is a great option to make a considerable addition to the slim package of your pension. But the intending candidates must consider over various points prior to making up their mind whether to go for a remortgage equity release option.

The elders choose to remortgage their properties to support themselves in their twilight days. With rolling of time, the real estate value continues to go up. But if the property value dips in the event of a wobbly economic condition, you may not have enough equities to resort to the remortgage equity release policy.

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Remortgage adverse credit, or adverse credit remortgages are offered to customers whose credit status is not good at all, meaning they would not qualify for the ordinary remortgages due to the adverse credit situation. In certain instances, remortgage adverse credit may be awarded at lower interest rates compared to what the customer is paying at present; and the remortgage can be used to lend funds or acquire property just as equity could do.

How you can utilize remortgage adverse credit
Remortgage adverse credit can be utilized in several ways to your benefit. You can save money, raise some extra money, and even consolidate your big debts into one loan. By consolidating your bills into one for example, you will actually end up improving your credit score by paying in good time and in the process you can reduce the current amount of regular payments to your mortgage. With remortgage adverse credit, it’s also possible to borrow more finances at better interest rates to enable you settle other older debts.

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In the huge remortgage market with numerous providers offering the same products, it pays to perform remortgage comparison in order to establish what distinguishes one provider from another and how you can take advantage of that difference in product provision. The best way to do this is by taking the same product that is offered by several companies and analyzing the features. You will realize that a product from each company will have its own advantages and disadvantages which will affect your circumstances in different dimensions. A disadvantage in one lender’s product may be an advantage to you while an advantage in one lender may equally be a disadvantage when applied to your circumstances. Therefore, one important aspect you must keep in mind when conducting remortgage comparison is that you are comparing the products while paying attention to your circumstances.

The basis of remortgage comparison
The foundation of remortgage comparison should be strongly linked to what you want the remortgage to achieve for you. Maybe you want to move from what you feel is a high interest rate to a lower interest rate or perhaps you want to release your equity and get funds to make improvements to your home. It could also be that you want to save money or consolidate your bills into one debt. The reasons can be as many as there are options available for you to choose from. Regardless of the reason motivating you to remortgage, the comparison should drive you towards a lender that stands out as the most appropriate in your condition; from whom you will derive the greatest benefit.

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When looking for a suitable remortgage, the question of deposit becomes very important because this is money you will have to pay upfront before you are offered the remortgage. Depending on the market conditions and your financial status, sometimes you can pay a deposit as high as 20% of the remortgage value. Lenders get particularly cautious about deposit when the property markets are not performing well, when prices are almost going down. The caution exercised by lenders is due to the fact that they cannot be sure about total repayment of the loan; given the present circumstances. It becomes even difficult for those customers with negative equity because they are often required to raise high deposits in order to be given any meaningful remortgage deal. However high the deposit amounts can get, if you really must get a remortgage, then you will have no option but to raise the required deposit so that you can qualify for the remortgage.

What you can do to raise the remortgage deposit
Save for a while: Start to save as soon as you start to feel that you need a remortgage, however small the amount. You could even be saving towards the deposit as you continue to explore other possible options.
Extensive research: Never allow yourself to be scared away by a few lenders who charge high percentages of deposit. Given that there are so many lenders in the market with competitive offers, you can still find lenders who will give you the same remortgage product at a much lower deposit. It may take time to accomplish this but it’s worth it in the long term.
Stick to budget: Budgeting does some financial magic when adhered to with discipline. If you remain accountable to how you spend your money, you can gain a lot of money that would have been spent unwisely. This will add up towards the deposit you so much need..

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