Remortgages

Remortgages

There are many different types of remortgages on the market and searching through the different products can be time consuming & daunting. Talking to a mortgage specialist can make this process easier, as they will review your personal circumstances, advise you how much you can borrow and recommend you suitable products that are currently on the market.

A mortgage is a sum of money that is borrowed from a bank or building society in order to buy a property. The amount is then paid back in monthly payments over an agreed period of time together with accrued interest. The two main types of remortgages are repayment and interest only.

Repayment

A capital and repayment mortgage is when your monthly repayments consist of two parts; the capital repayment and the accrued interest. Over the duration of the mortgage you will be reducing the amount of your actual borrowing and this reduction will show on your annual mortgage statement.

Interest Only

With an interest only (ISA, pension or endowment mortgage) you only repay monthly the interest to your mortgage lender. As the borrower you then need to take out another repayment vehicle such as an endowment, ISA or pension plan. At the end of the mortgage the additional payment vehicle is then used to pay off the original sum of money borrowed.

Once a mortgage type has been decided you will need to consider the 5 main types of mortgage rates available:

Variable Rate Mortgage

Borrowers agree to pay the Lenders Standard Variable Rate and your monthly repayments will increase or decrease according to the market conditions.

Fixed Rate Mortgage

Your mortgage interest will remain fixed for a specific amount of time so your monthly repayment will not change. Lenders usually offer fixed rates for a period of 2-5 years although there are products on the market which offer shorter and longer time periods. When the fixed rate period ends the mortgage usually reverts back to the lenders standard variable rate.

Capped Rate Mortgage

A Capped Rate Mortgages have a set upper value for their interest rates so your monthly repayments will not rise over this rate, no matter how high the lenders standard variable rate goes. If however the rate drops below your monthly interest rate your monthly repayment will reduce accordingly.

Discounted Rate Mortgage

The lender will offer a discount on their Standard Variable Rate of say 1.2% for an agreed amount of time so your monthly payment may vary depending on the current market conditions. If the Standard Variable Rate was say 6% the rate payable would be 4.8% then if the variable rate rose to 7% the rate payable would be 5.8%.

Tracker Rate Mortgage

This is a variable rate that tracks the movement of a prevailing rate such as The Bank of England Base Rate or London Interbank Offered Rate. The repayment rate will be set at an agreed percentage of say 1% above the relevant base rate and track any increases or decreases in the rate it is tracking.

It is standard for Lenders to change upfront booking and arrangement fees which can sometimes be added to the sum of money you are borrowing. Frequently lenders apply an Early Repayment Charge that acts as a lock in to your mortgage, if the borrower then chooses to repay the mortgage early often heavy Early Repayment Charges will apply. Often Early Repayment Charges can out last your agreed rate period locking you into the lenders standard variable rate.

Many other offers and incentives are offered with different mortgage packages including:

• Cashback
• Offsetting
• Flexible / Lifestyle Mortgages
• Free legal Fees
• Contributions towards conveyance costs

Making the right decision when choosing a mortgage is imperative and getting the correct advice from an experienced advisor can save you time and money. To speak to one of our advisors please call us 0800 3582014 or complete our Call Back form.