RE-MORTGAGING : Do I Qualify?
As a potential remortgagee, you need to establish whether you have anything to gain by moving your mortgage.
There are a number of things that can be achieved by a remortgage - you could cut your rate, release equity that has built up in your property, or move from a variable-rate deal to a fixed rate making it easier to manage your budget.
The most popular reason for remortgaging is to reduce monthly repayments. If this is your motivation you should look at the rate you currently pay and then see if there are any better rates on the market.
A fundamental reason to re-mortgage would be to save money , or to take advantage of the value (equity) within your home. Another reason, is to possibly borrow more money (hopefully at a cheaper rate), to renovate the house, go on holiday, pay for a wedding, school fees, or consolidate some debts like credit cards/ personal loan or overdraft etc. You may also be able to “capital-raise” and use some of the equity within your home to purchase a second (investment) property. As the client, you can potentially save a lot of money, especially if you are currently on the lender’s standard variable rate by switching to a lower rate mortgage.
What are the criteria for re-mortgaging?
• Most lenders use standard income multiples of two to three times joint income, or three to four times a first income plus a second income. However some lenders will offer enhanced income multiples. Other lenders will accept self-certified statements of income.
• Borrowing is restricted by the value of the property. Some of the most interest rates are only available to customers who aim to borrow up to 75% or less of the value of their home. This is called the LTV (loan to Value). HOWEVER, there are plenty of lenders who are willing to offer up to 95% or even 100% or more of the value of the property.
• Borrowing more than 75% LTV, a HLC (Higher Lending Charge) can be charged. However, with certain lenders, it can be up to 90% of the value or with some lenders not applicable at all.
Documentation needed to process a re-mortgage
It all depends on circumstances and the lender themselves as to what information is required to remortgage, however the following are very useful:
1. Your latest P60
2. Last three months pay slips/ or statement from your accountant if self-employed.
3. Recent mortgage statements
4. Up to the minute information on your current mortgage – You should personally request a written redemption statement from your current lender, which will detail the exact cost of repaying the mortgage, including outstanding interest, penalties, insurance premiums, fees and charges.
5. Proof of identity – e.g. copy of your passport or driving license
6. Proof of residency – a recent utility bill (not mobile bill) dated within the last 3 months is best.
About the Author: Rich Sunset is an active mortgage professional in the New York Mortgage Business and has provided just the right loan to the right customer for the perfect fit.