What is the purpose of remortgaging?

Remortgaging is something which many homeowners consider, whether it’s to consolidate debt, to buy another property or to carry out some home improvements. It is something which we can advise you on, whatever your circumstances. However, because there are always many questions surrounding this subject, we have put together some of the most commonly asked questions here that we think could be of a real help. If you do need more assistance, please get in touch with one of our team today. 

Can I remortgage if I own my house outright?

If you have finished paying off your mortgage, then you are in a good position to remortgage, as you own 100% equity in your property. A home with no outstanding mortgage on it is referred to as an ‘unencumbered property’ and while remortgaging is entirely possible, the rules lenders have in place are slightly different compared to those who are simply looking for a mortgage.

Deals available to you at the time you are considering remortgaging will depend on the amount you wish to borrow as a percentage of your home’s current value, also known as the loan to value ratio (LTV). Depending on the lender, you could be offered the purchase rate instead of their remortgage rate, meaning you could get a better rate that suits you. Before you do anything, make sure you talk to us first about finding the best lender for you.

Can I remortgage when Im over 60 or retired?

Although it is possible, it is more difficult to remortgage for older borrowers. There is a broad mix of lenders out there; some are willing to provide mortgages that you will still be paying into retirement, and there are others who will not. Of course, you should bear in mind that if you are retired and no longer have an income each month, then we may look to source a different product for you.  If you are in, or about to be in, this age bracket, our team can advise on what your options are.

Can I remortgage if I’m self-employed or freelance?

Yes, although you may find there is more information that is needed to prove your income. We will look at any contract you have in place, your accounts, salary and dividend income if you have a limited company, or we may need to consider the profit within the company instead. Lenders also have different criteria which affects the amount they are able to lend you so it is worth speaking to us to source the lender that will be able to provide the amount you need. Talk to our team about what you are looking to do so they can advise you of what is needed.

Can I remortgage my shared ownership home?

Potentially, yes you can. However, this is a unique type of lending, meaning that you will need to find a lender that offers mortgages on this type of property. It is good to know in advance that while some lenders will offer you their entire range of mortgage rates there will be some that have dedicated shared ownership rates. Whether you’re looking to remortgage your shared ownership home, or to buy an additional share of your property – or ’stair casing’ as it is known – it’s always worth talking to us in the first instance so as we can advise.

Can I remortgage if I have negative equity?

Being in ‘negative equity’ means that you have no equity in your property. This means that you are a higher risk for a lender, and that any mortgage deal they offer you will not be as good as you would like. It also means that you’ll find it difficult to secure a new mortgage deal with a new lender. If, however, you are in a position to overpay your mortgage, then this could be a way of reducing your negative equity. We can advise on the rates your present lender will offer you if you are in this situation – our team can help with this; give us a call and we can talk you through the options.

Can I remortgage with the same lender?

Yes – you are, in effect, looking to choose a new rate with them and if you need additional capital, this is referred to as a further advance.  We can advise on the offering with your present lender – it doesn’t necessarily mean it will be the best deal, so chat to us so we can compare across the whole of the market – including fees – before you commit to your new deal.

Can I remortgage during a fixed term? 

You can remortgage during a fixed term, but be aware that it may not be the best option for you. This is something to particularly bear in mind if your current mortgage – like many on the market – has an early repayment charge. If you’re considering remortgaging to release equity, it could be better for you to take a further advance for a short period (instead of having to pay the early repayment penalty). Whatever your decision, talk to us about what you’re thinking of doing first and let us see if we can help you.

Can I remortgage before my deal ends? 

You can, but if your current mortgage has an early repayment charge attached to it, then this will have to be taken into account. As we have seen recently, mortgage rates can rise, so if you are thinking of finding a new mortgage, you shouldn’t wait indefinitely. Depending on the lender, mortgage offers remain valid for approximately 3 to 6 months, which means you could begin the process of a securing a new deal around a few months before your current deal ends. 

Can I remortgage if I am on maternity leave? 

This is possible, however, different lenders have different policies that you should be aware of. As an example, some lenders will get in touch with your employer to find out what your return to work date is, and the salary you will be paid on your return. There are lenders who will ask about childcare costs; lenders who will request your return to work date is within 2 to 3 months of the start date of your new mortgage deal, and lenders who will want to see proof of savings you hold that would cover the length of your maternity leave. Being off work with a new baby is a demanding period of your life, but don’t let these possible requests put you off; talk to our team and get their expert advice first.

Can I remortgage if I am about to change job? 

Yes, but the offers available to you could be restricted and the lenders that do allow you to do this would require you to meet all their criteria, whatever that may be. This all depends on the lender; for example, some may ask that you have a position that starts within the next 3 months. If you think you need some assistance, our team are the best people to speak to.

Can I remortgage if I am on probation period? 

Yes, but this is subject to lender-specific criteria. It’s important to remember that you can talk to our team about remortgaging at any point; not just when your job role has been confirmed officially permanent.

Can I remortgage using my Child Tax Credit & Working Families Tax Credit? 

This is down to the individual lender. For instance, some are happy to accept 100% of both of these credits (providing they are not about to come to an end/if your children are under 14 years of age); some will accept 50%, and some won’t take any at all. it is always worth talking to our team first, as the differences in these policies can have an impact on the amount you can borrow.

Can I remortgage using my maintenance payments? 

As long as you meet specific criteria, a percentage of your maintenance payments – from 50% to 100% – will be taken by most lenders. The criteria, for instance, is if the payments are being made via a court order or if you have no less than 3 months’ worth of bank statements to prove they are being made.

Can I remortgage using mine or my dependents disability living allowance? 

It depends on the lender. Like tax credits and maintenance payments, the lenders who accept disability living allowance will take a percentage, as well as some having specific conditions. An example of this would be that the living allowance is not be your only form of income, and that the allowance will be in place for the lifetime of the mortgage. Our team will be able to help you find the lender that works best for you and your situation, so talk to them first.

Can I remortgage with a bad credit history? 

Again, this is lender specific. Your credit file would be assessed to determine the best lender/provider for you, and it would be helpful for you to have a copy from one of the 3 credit agencies lenders use – Experian, Equifax or Call Credit (Noddle) Please get in touch with us first to see how we can help you.

Can I remortgage if I have a buy to let mortgage in the background that is not self-financing? 

Depending on the lender, this could be a possibility. Lender policies vary on this across the board; some will look at your other commitments and use your earned income to cover a shortfall. Lending on a buy to let mortgage, or with this type of mortgage in the background, is quite complex now. Don’t worry if this is slightly confusing; we can help.

Can I remortgage to consolidate or pay off debt? 

This is a possibility. But, if you are consolidating your debt, you should be aware that many mortgage lenders will restrict your borrowing amount based on the value of your property. Also, depending on the kind of debt being consolidated, not all lending policy will be the same.

One key point to remember here is that if you were to consolidate, you would be making an unsecured debt* secure. As well as this, if the cost is being spread over a longer time period (and even if it is on a lower rate) you could be paying more in interest in the long run. One way to avoid this would be to make overpayments on your mortgage. Whichever option you choose, it’s vital that you consider all the pros and cons first. And if you want assistance on this, make sure you speak to our expert team.

*Mortgage lenders don’t have rights to any collateral for unsecured debt. If the unsecured debt is added to your mortgage, this makes the debt secured. This, in turn, means the lender does have the legal right to take your property (the ‘asset’) if you fail to make your mortgage payments.

Can I remortgage to capital raise for home improvements or personal use, i.e. to buy another property? 

It depends on the lender in terms of how much they will be willing to lend. A number of mortgage lenders are happy to lend up to 85% loan to value, whether you are remortgaging for home improvement purposes, or if you are thinking about buying another property. Talk to our team about the best lender and option for you.

Can I remortgage to raise capital to buy someone else out of the property?

Providing your income is sufficient enough to cover the mortgage in full then, yes, this can be considered. However, different lenders will lend you different ‘loan to value’ amounts. For instance; many will limit the loan to value amount to 80% or 85%, while some lenders will consider up to 90%. You will also need to be aware of additional legal charges when it comes to arranging this type of mortgage deal. Again, depending on who your lender is, they could either expect you to instruct your own solicitor, or they will allow you to use their own ‘in-house’ solicitors to complete the additional paperwork for you. This is called a ’transfer of equity’, and is where the additional charges may be incurred. Stamp duty land tax also needs to be considered.

Can I remortgage to capital raise for business use? 

This is difficult to arrange as a residential loan but it may be that a commercial lender will use your house as security.  We can help advise on the most suitable mortgage lender, so talk to us first.

Can I remortgage if I put solar panels on my house? 

This shouldn’t be an issue for most lenders, however you will be asked to meet certain criteria, As an example, a termination clause needs to be part of the lease and/or will require a solicitor to agree that it adheres to CML/BSA guidelines.

Can I remortgage a property I have recently purchased? 

Some lenders allow you to do this immediately (as in from the day you move in), while others will only let you start the process after 6 months of ownership. Talk to us about finding the best lender for you.

Can I remortgage my Help to Buy mortgage? 

It is possible to secure a competitive rate with another lender but you may find that additional borrowing is difficult without having paid the ‘help to buy’ share back first. If you have a Help to Buy mortgage and are reviewing your mortgage, speak to our team first.

Can I borrow 95% of the value of my new build house/flat? 

The majority of lenders restrict lending at this level on new build houses and flats.  If you currently own a new build, get in touch and let us advise you – each lender has different criteria.

How many years do I need on my lease to remortgage my leasehold flat? 

The average number of years that most lenders require on your lease when you apply for a mortgage is 70 years. There are some lenders out there who may consider less. Depending on how short your lease is, you could look into the cost and the possibility of extending it before you apply. You may find the following website helpful www.lease-advice.org

Can I remortgage if I have a second charge on the property with another lender? 

Many lenders will consider this, but they will ask for a deed of postponement so they can have the first charge on the property. Affordability is considered carefully here as you will be increasing borrowing. You can talk to us about your options.

Can I remortgage using my bonus payments? 

It helps to see that a bonus has been paid for the last 2 or 3 years to show any lender it is a regular part of your income.  Some lenders will use 100%, others 50% – this also depends on the frequency.

Can I remortgage using my overtime or commission? 

This is lender-dependent. There are some who will be happy to use 100% of either overtime or commission but it needs to have been paid each month for the last few months.

Can I remortgage using my limited companies retained profit? 

Some lenders do work just from your salary and dividend but we do work with lenders that will consider the profit of your company both before and after corporation tax has been paid.

Can I remortgage if I am an IT contractor? 

Yes, there are specific rules regarding IT contractors and we will need to ask you for more information ie whether you are self employed or employed, or have a Ltd Company

Some lenders will work on a calculation based on your day rate.

Can I remortgage if I am on a fixed term contract? 

Yes, this can be considered – we do need further information including information about your work history, and whether your contract has been renewed in the past and how much time is remaining.

Can I remortgage if I am a day/weekly rate or zero hours contractor? 

Providing you have a good track record of employment with the same employer and consistency with earnings each month, we are aware of lenders who will be happy to help you. We can advise you with the options open to you, so make sure you get in touch with our team.

Can I remortgage if I work for an umbrella company? 

Yes, this can be considered.  We will need to ask for further information to clarify which lenders can help such as whether you are self employed or employed by the business.

Can I remortgage if I am a temporary worker or agency worker? 

This situation can be difficult when looking to secure a mortgage but please get in touch and let us have some more information and we will let you know if there is a lender who is able to help.

Can I remortgage on interest only? 

There are many interest only options available from lenders now along with certain criteria that has to be met, the most important one being asked is ‘what will be the method of repaying your mortgage’  We work with a lot of interest only clients and can help advise you regarding this matter.

When I remortgage will all lenders use my credit score? 

All lenders will carry out a credit check when assessing an application but not all lenders will base their decision on the result of this check.  Different credit agencies are used and lenders will set their own internal score that needs to be met.  It is worth checking your credit file through one or more of the following companies – Experian, Equifax, Call Credit. (Noddle)

Can I remortgage if I missed payments? 

It is difficult to remortgage if you have missed a mortgage payment recently.  These and missed payments for other credit commitments you may have will be recorded on your credit file and could affect whether an application is accepted or not. If you have missed a payment and are unsure what this means for you, talk to us as you may have more options open to you.

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Private Wealth Mortgages Ltd is authorised and regulated by the Financial Conduct Authority. FCA Number: 445980

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