Remortgaging for the second property is always a promising option. Still, it comes with many aspects that demand consideration to make sure that you take a correct decision with no possibilities to regret later. Besides, not all the borrowers have the right kind of information about the role of remortgage in buying another property. Here are several points that can clarify things with detail.
Factors that take you through the journey of remortgage are –
You cannot afford to attain remortgage without considering the following factors –
- 1 .Affordability
- 2. Equity
- 3 property type
- 4. credit history
- 5 personal circumstances
- 6 Other sundry factors
Your performance on all the above aspects becomes the stimulator to bring a final result on your remortgage possibility. Take them one by one.
As you know, it is always an essential thing for the lender to know how much the applicant can afford to pay you should work on your affordability. In the case of remortgage, this situation is a bit different because the lender has the repayment performance of your previous mortgage to see and check if you were making the repayments on time or not. It decides if you can get the new deal for another property or not.
It is the amount of the difference between the property value and the money you owe to the lender. More significant you have paid in the previous loan; higher are the chances of getting a desirable deal. Also, the payment history affects the equity as delayed and missed payments cause penalty even accumulation of the interest rate. This, in turn, increases the total cost and thus reduces the equity. It is better if you pay on time.
Indeed, property type is always necessary. If your property is an entirely residential one at a good location, you can expect a good property deal. However, if a part of your property is in a building that is partially used for commercial purpose, then you may need to get into a struggle on the interest rates, repayment plans etc. In short, the lenders are a bit reluctant and hesitate to allow more flexibility in terms and conditions.
Of course, the key factor dominates most of your financial decisions, not only yours but also of the finance companies. Maybe you paid the previous mortgage instalments at the right time, but your financial behaviour towards the other obligations in the past was questionable. This can make your remortgage journey a bit difficult if you want to stay safe and borrow funds smoothly for the next property, do not forget that your past will walk along with your present.
Everything that affects your personal life and has an impact on your finances comes in the notice of the lender. Whether it is about your employment stability, your overall financial condition, your changed relationship status or anything that can affect your affordability for remortgage in the positive and negative sense will affect the final decision.
In short, you need to be very careful about every decision you make in your personal life; for example, your separation from your partner may affect your finances. You may need to pay the alimony money, which drastically reduces your repayment capacity. Similarly, separation from your husband may put you in a situation where you will be the only responsible person/woman to tackle all the expenses and debt payments. It is sure to leave an impression on remortgage deal.
Other sundry factors
Other sundry factors can be predictable, as well as unpredictable. For example, the impact of Brexit on the UK economy was anticipated, but the massive loss due to coronavirus was utterly unpredictable. Both situations have an intense effect on the financial conditions of the natives of the UK.
The latest condition of the lockdown due to covid-19 is the cause to make many people apply for a mortgage payment holiday. It is not the problem of the borrowers only even the complete market, including the lenders, brokers and property agent are under the adverse effect. Nevertheless, when the market opens again, the latest financial condition of the applicant comes under consideration.
What do you need to do if you are a self-employed?
As a self-employed person, you need to present the accounts for 3 years. However, some lenders act flexibly on this aspect. They are also ready to consider the applicant with only one year account. Still, for that, the annual turnover of the business should be promising also the business owner should have the future projects of the promising clients in the industry. Do you also have this situation in your favour, then approval can be more accessible. Also, if you have worked in the same field as an employee, it is possible to get a good remortgage deal with one year of accounts.
What is the best way to get a remortgage deal
It can be difficult and confusing to know, which lender available in the market suits to you. Isn’t it better to hire someone who can do the task for you, there is a good number of options available for broking companies. By selecting an appropriate remortgage broker in the UK, you can easily find a practicable, lucrative and affordable deal to find your way to smooth approval.
Do not make multiple applications to the lenders as it will affect your credit score severely. A broker can bring an accurate property loan deal for you. It is quite efficient because it can handle all the loan procedures amazingly. You can stay away from all the mess and stress, just said wait and watch your application getting approved from the lender.
The above bunch of information should be sufficient to help you decide whether you are going in the right direction for a remortgage or not. To avoid any confusion, it is better to do to in-depth market research maybe e your friends and family for a mortgage broker such as Shine Mortgages can help you find the right option and get things done faster.