A re-mortgage enables people to either improve their mortgage terms and conditions on their existing mortgage, or raise capital for major expenditure items.
Examples of this are: home improvements, purchasing a partners’ equity share, paying for school fees, other major purchases and raising capital to invest in other property.
It is a common misconception that re-mortgages are only relevant where clients have an existing mortgage, but it is also a common practice for re-mortgages to be arranged on unencumbered (with no mortgage) properties.
For many years, lenders have recruited new borrowers by assisting re-mortgage applicants in paying for the valuation of the property and the legal expenses of arranging the new mortgage.
For the uninitiated it is easy to assume that all mortgage lenders are the same. In fact, the opposite is very true because each mortgage lender has its own lending criteria. When we research the market to find the best re-mortgage for our clients, we take into account our clients’ personal circumstances and borrowing objectives and then match them against lenders criteria. Having done so, we then select and recommend the best terms and conditions available at the time from the list of lenders whose criteria meets our clients’ circumstances.
Sometimes, the number of available lenders can be quite restricted.
For example, should a client wish to purchase a property with a thatched roof, currently only a handful of lenders in the UK will lend on this type of property.
Lenders often market products which only have a short period of benefits relating to the product terms and conditions (typically between 2 and 5 years) and when those benefits come to an end, it is usual for the lender to transfer the borrowers’ interest rate to the lenders standard variable rate (SVR). Lenders SVRs are predominantly not competitive in today’s mortgage market compared to new product offerings and therefore we would encourage all mortgage borrowers to check out if they have the most competitive interest rate, terms and conditions, for their circumstances not only when their product benefits come to an end but at any given time.