Types of Remortgages
January 5, 2009 by admin
Filed under Mortgage Articles
Before we dive into types of remortgage loans, it’s important to understand the basics of what a remortgage is. A remortgage is a type of transaction where the homeowner chooses to switch mortgage lenders, but they will stay in the same property as in the first mortgage. People opt to remortgage when they want to save on repayments or if they want an influx of surplus funds. Those who have gone through a new mortgage application may find that the application for remortgage is remarkably similar, yet slightly more simple and less time consuming.
Types of Remortgages
Remortgages generally fall into three categories: fixed rate, discounted rate, and variable rate. With a fixed rate, your payments will be set for a certain length of time. During this period, your payment rate will not fluctuate up or down, but it will stay at the same level. Once the predetermined fixed-rate period is over, the loan will then adopt a variable rate. A discounted rate remortgage is like a variable rate mortgage, but it differs in that the lender offers you a discount on your interest rate. Thus, your payments will be reduced for a certain length of time, but your payments are still influenced by the fluctuations in interest rates. A discounted rate remortgage becomes a variable rate remortgage once the discounted period is over.
A variable rate remortgage makes it fairly difficult to predict what your monthly payments will be since the interest rate fluctuations will determine the amount you have to pay each month.
Benefits of Each Type of Mortgage
A fixed rate remortgage is good because the fixed rate protects you from any upward fluctuations of the interest rate. However, do not expect to be benefited if the interest rate goes down. This type of remortgage is apt for thrifty borrowers who plan loan payments carefully. Such borrowers want the security from interest rate fluctuations that a fixed rate remortgage guarantees.
A discounted rate remortgage is advantageous for those who appreciate lower initial payments, and for those who want to pay lower interest rates when the interest rate decreases. Bear in mind that when you possess this type of remortgage, your payments go up as interest rates go up.
A variable rate remortgage generally benefits people who want their payments to go down when interest rates fluctuate downwards, but are willing to pay more when interest rates go up. A variable rate remortgage borrower does not want to be tied into a fixed interest rate in the case that the base rate decreases.One thing you have to remember, regardless of which of the type of remortgages you choose, is that there will be fees for a new survey of your home to determine the value. In addition, there will be arrangement fees, broker fees, legal fees, etc. to deal with.
Types of Remortgage Borrowers
Just like there are different types of remortgage loans, there are also different types of borrowers (good and bad credit borrowers). A good credit borrower is someone who can guarantee that he can shoulder the payments for any of the three types of remortgages. Conservative lenders may limit their market to this type of borrower.
On the other hand, the more daring remortgage lenders may opt to issue any of the three types of remortgages to people with poor credit ratings or bad credit history. Bad credit remortgage lenders will know whether you have poor or negative credit because all lenders conduct a credit check on UK borrowers. They will be looking for evidence of defaults, IVAs, debts, bankruptcy, the credit history proper, mortgage arrears, defaults and CCJs. A negative credit rating could result from factors that are out of your control, such as a divorce, a severe illness, an accident that left you unable to work, and other such things. In such cases, the lender may be willing to accommodate your application and give you a bad credit remortgage. It is important that you provide all the information needed by the lender so that your remortgage application will be considered with care.
It is necessary to get remortgage advice before you choose a loan for your situation, advice such as that given here about the types of remortgages available. You should know that a remortgage is not final. You may switch to other types of remortgages if you decide that a different type of loan will be more financially advantageous. So get to know the types of remortgages in greater detail before you sign on the dotted line.
If you’d like help finding the best fixed rate remortgage, variable rate remortgage, discounted rate mortgage, or bad credit remortgage, take a moment to fill out our short form, and one of SimplyFinance’s representatives will contact you and help you on your way to finding the best remortgage lender for you.
http://www.simplyfinance.co.uk
Types of Remortgages
Remortgages generally fall into three categories: fixed rate, discounted rate, and variable rate. With a fixed rate, your payments will be set for a certain length of time. During this period, your payment rate will not fluctuate up or down, but it will stay at the same level. Once the predetermined fixed-rate period is over, the loan will then adopt a variable rate. A discounted rate remortgage is like a variable rate mortgage, but it differs in that the lender offers you a discount on your interest rate. Thus, your payments will be reduced for a certain length of time, but your payments are still influenced by the fluctuations in interest rates. A discounted rate remortgage becomes a variable rate remortgage once the discounted period is over.
A variable rate remortgage makes it fairly difficult to predict what your monthly payments will be since the interest rate fluctuations will determine the amount you have to pay each month.
Benefits of Each Type of Mortgage
A fixed rate remortgage is good because the fixed rate protects you from any upward fluctuations of the interest rate. However, do not expect to be benefited if the interest rate goes down. This type of remortgage is apt for thrifty borrowers who plan loan payments carefully. Such borrowers want the security from interest rate fluctuations that a fixed rate remortgage guarantees.
A discounted rate remortgage is advantageous for those who appreciate lower initial payments, and for those who want to pay lower interest rates when the interest rate decreases. Bear in mind that when you possess this type of remortgage, your payments go up as interest rates go up.
A variable rate remortgage generally benefits people who want their payments to go down when interest rates fluctuate downwards, but are willing to pay more when interest rates go up. A variable rate remortgage borrower does not want to be tied into a fixed interest rate in the case that the base rate decreases.One thing you have to remember, regardless of which of the type of remortgages you choose, is that there will be fees for a new survey of your home to determine the value. In addition, there will be arrangement fees, broker fees, legal fees, etc. to deal with.
Types of Remortgage Borrowers
Just like there are different types of remortgage loans, there are also different types of borrowers (good and bad credit borrowers). A good credit borrower is someone who can guarantee that he can shoulder the payments for any of the three types of remortgages. Conservative lenders may limit their market to this type of borrower.
On the other hand, the more daring remortgage lenders may opt to issue any of the three types of remortgages to people with poor credit ratings or bad credit history. Bad credit remortgage lenders will know whether you have poor or negative credit because all lenders conduct a credit check on UK borrowers. They will be looking for evidence of defaults, IVAs, debts, bankruptcy, the credit history proper, mortgage arrears, defaults and CCJs. A negative credit rating could result from factors that are out of your control, such as a divorce, a severe illness, an accident that left you unable to work, and other such things. In such cases, the lender may be willing to accommodate your application and give you a bad credit remortgage. It is important that you provide all the information needed by the lender so that your remortgage application will be considered with care.
It is necessary to get remortgage advice before you choose a loan for your situation, advice such as that given here about the types of remortgages available. You should know that a remortgage is not final. You may switch to other types of remortgages if you decide that a different type of loan will be more financially advantageous. So get to know the types of remortgages in greater detail before you sign on the dotted line.
If you’d like help finding the best fixed rate remortgage, variable rate remortgage, discounted rate mortgage, or bad credit remortgage, take a moment to fill out our short form, and one of SimplyFinance’s representatives will contact you and help you on your way to finding the best remortgage lender for you.
http://www.simplyfinance.co.uk
What You Need to Know About UK Mortgages as a First Time Buyer
January 4, 2009 by admin
Filed under Mortgage Articles
The time has come for you to buy a house, but for a first time buyer, the housing market can be frightening and confusing. Unethical lenders may try to ensnare you with high interest rates and a loan that will have you paying for years. Many houses are priced out of the range affordable by first time buyers. The market for mortgage loans fluctuates every year, the interest rates rising and falling without apparent rhyme or reason. All these things make finding a good deal on a house difficult.
A first time buyer should consider a number of factors before going to purchase a property, such as how much they will be permitted to borrow, how much they can afford to pay per month, the initial cash outlay for fees and deposit, and what kind of mortgage they ought to use. A mortgage broker, who will act as an intermediary to find you the right mortgage, can help immensely to ease this process.
It can be dangerous to borrow too much money to buy a house, no matter how tempting the idea of home ownership is. The problem of negative equity is when your mortgage is worth more than your house, is still a danger. Many first time buyers consider only the monthly payment when they sign up for a mortgage. It also is important to look closely at the full amount you will be paying, and the length of time it will take to repay. Some kind of deposit is normally required, as well. Though there are a few lender who will offer a mortgage for 100% of the price of your house, these are rare, and will ensure a long payment process. It is best to have at least 5% of the purchase price. If you have 10% or more, you can secure a better deal on your mortgage.
There are many different types of mortgage that can be chosen. These include the fixed rate mortgage - with an unvarying interest rate over the life of the loan, the adjustable rate mortgage is one where the interest rate is periodically adjusted based on a index, and the interest-only loan is where for a period of time, the buyer pays only the interest on the loan, then must begin making payments on the principal. These last two types can be tempting to the first time buyer with little income, but can result in more money paid out over the lifetime of the mortgage. An adjustable rate mortgage can be the better deal if interest rates continue to fall, but worse if they rise. Interest only loans permit a buyer who will be in better financial shape in a few years to get a foothold in the housing market. The downside is that the principal will be untouched for those years.
With careful planning and consideration, the housing market need not be frightening or daunting to the first time buyer. All that is needed is a good assessment of your needs and situation.
A first time buyer should consider a number of factors before going to purchase a property, such as how much they will be permitted to borrow, how much they can afford to pay per month, the initial cash outlay for fees and deposit, and what kind of mortgage they ought to use. A mortgage broker, who will act as an intermediary to find you the right mortgage, can help immensely to ease this process.
It can be dangerous to borrow too much money to buy a house, no matter how tempting the idea of home ownership is. The problem of negative equity is when your mortgage is worth more than your house, is still a danger. Many first time buyers consider only the monthly payment when they sign up for a mortgage. It also is important to look closely at the full amount you will be paying, and the length of time it will take to repay. Some kind of deposit is normally required, as well. Though there are a few lender who will offer a mortgage for 100% of the price of your house, these are rare, and will ensure a long payment process. It is best to have at least 5% of the purchase price. If you have 10% or more, you can secure a better deal on your mortgage.
There are many different types of mortgage that can be chosen. These include the fixed rate mortgage - with an unvarying interest rate over the life of the loan, the adjustable rate mortgage is one where the interest rate is periodically adjusted based on a index, and the interest-only loan is where for a period of time, the buyer pays only the interest on the loan, then must begin making payments on the principal. These last two types can be tempting to the first time buyer with little income, but can result in more money paid out over the lifetime of the mortgage. An adjustable rate mortgage can be the better deal if interest rates continue to fall, but worse if they rise. Interest only loans permit a buyer who will be in better financial shape in a few years to get a foothold in the housing market. The downside is that the principal will be untouched for those years.
With careful planning and consideration, the housing market need not be frightening or daunting to the first time buyer. All that is needed is a good assessment of your needs and situation.