As a homeowner, there will come a time when your initial fixed period comes to an end and you have the option to remortgage your home.
If you’re on your first initial mortgage and have yet to take out a remortgage, it is basically a new mortgage taken out on the same property, to either replace the current mortgage, or to borrow some money against your home.
People may use this for a variety of reasons, such as capital raising, home improvements and more. Another one that you may be unaware that you can use it for, is to purchase another property.
In some cases, a homeowner may have built-up some extra money in savings as a means of affording the deposit for another property.
Generally speaking though, any homeowner that comes into additional income during their mortgage term will put that towards paying off their remaining mortgage balance.
Instead with this, we look at things like equity. Equity is the difference between the properties value and the amount left on your mortgage balance.
If there is enough in your home, you may be able to remortgage to release equity, as a way to fund the deposit of a new property.
This is a great use of money that would otherwise be sitting nicely in your home, waiting to be used! Our team provide expert remortgage advice, while our advisors have a lot of experience in dealing with remortgages to release equity, so will be glad to help you out here.
Well you might have sufficient equity, but can you actually afford to do this? As a part of our service here as a mortgage broker, one of our experienced mortgage advisors will do what is called a Viability Check.
So long as you are honest about what you are trying to achieve, your mortgage advisor will be able to let you know whether or not this is worth even attempting.
If your income and circumstances have not changed, it is very likely that you’ll be able to remortgage. It works a little differently for purchasing another property though.
The Financial Conduct Authority does not regulate some types of buy to let or commercial mortgages.
Let’s say you want a buy to let mortgage and become a landlord. Your mortgage advisor will perform some calculations and stress-test your potential rental income.
Generally, buy to let purchases pay for themselves, so if it is deemed enough to cover the costs of an additional mortgage, it’ll be smooth sailing.
On the other hand, if you’re looking to buy a property for residential purposes, such as a second home for a legitimate reason (such as a home closer to your work if you commute, or for a family member) we will need to be sure that you can afford to proceed.
You won’t be generating additional income from this property, so that’s two lots of mortgage payments you will be covering out of your own pocket.
If you are looking at your options for taking out a remortgage to release equity, as a means to buy another property, it’s recommended that you speak with a specialist.
Book your free remortgage review today and a member of our dedicated remortgage advice team. They’ll run through your case and make sure you’re able to proceed, before you release some equity from your home.