And why failing to seek professional mortgage advice doesn't make any sense.
In today’s world of comparison sites, which allow one to compare the price of almost anything, why would anyone go direct to a lender when it comes to getting a mortgage? And, with a plethora of mortgage brokers out there, many of whom offer free mortgage reviews, what reason is there not to take them up on an offer that could save you hundreds, if not thousands, of pounds?
An example I often use is this; when you get your car serviced, do you do it yourself? No, unless you are a trained mechanic. Do you go to the first operator you can find? Again, no. Do you shop around and find the best deal possible? Yes, of course you do!
However, when it comes to finding the best mortgage, many either believe they can do the ‘servicing’ on their own, or decide to look no further than one lender. Picking a mortgage is likely to be one of the most important financial decisions a person makes in their life, so it makes sense to ensure you don’t end up paying far more than you really have to for years to come.
I once worked with a client who had already been turned down by two different lenders for differing reasons, ranging from his wife’s age to affordability issues owing the fact he already owned a residential property, which he was renting out.
I spent an hour or so with him one Saturday morning discussing his situation and discovered that he served in the army. He wasn’t aware that this meant he didn’t have to pay a consent to let fee; even though he had spoken to his lender on a number of occasions they had never told him that, as a serviceman, he was exempt from this particular charge. With this one little piece of information, and because I had experience of a similar scenario, I was able to save him a significant amount of money.
After gaining a full understanding of his situation, it didn’t take me long to review his circumstances and make financially beneficial decisions on the two mortgages. We freed equity from what was now going to be his buy-to-let to use towards the deposit on his new residential property, thereby reducing the level of borrowing required.
This in turn meant we were able to reduce the term of the mortgage, and keep it all within the client’s retirement age and also his wife’s. Not only that, but we managed to find a solution that was entirely affordable.
This particular client will be able to pay off the mortgage within 10 years, and has the guarantee that they payments will never increase because we took out a fixed 10-year mortgage. This all came with the added benefit that the new profit from the buy-to-let property – now on a much better rate – is enough to cover his mortgage payments.
Experience and knowledge of the market can make a big difference when it comes to finding the right mortgage. When making a decision that will impact your finances for many years to come, it makes sense to speak to someone that can secure a deal that will be as financially beneficial in the long-term as possible.
To speak to the author of this article Jason Whitehead, based in Gloucestershire, visit his VouchedFor profile here.
If you are looking for advice on a mortgage, or would like additional guidance in relation to your finances, search the VouchedFor database to find a professional in your area.
Who needs money ? Why remortgage ?
In today's competitive market, many borrowers choose to switch their mortgage every few years in order to take advantage of the new rates on offer. Those that remain on the same deal for the full term of their loan could lose out on a range of potential benefits, not least the opportunity to reduce the total amount paid back, which could be a significant margin in some cases.
In simple terms, remortgaging involves switching your current mortgage to a new deal, arranged either with your existing lender or with a new lender. As a current homeowner you may want to consider taking this step for a number of reasons, such as:
To save money If you're paying your lender's Standard Variable Rate (SVR), it's likely that your existing lender will offer a better rate and greater flexibility on other available products. This could allow you to save money on your monthly repayments, or to repay your mortgage sooner. And if your current lender doesn't offer better rates or greater flexibility on its other products, you may want to consider switching your mortgage to another lender, even if doing so would trigger early repayment charges payable to your existing lender, as this could still mean a net saving to you.
To raise money Higher income or a rise in your property's value means you could increase your mortgage to help pay for major outgoings such as a wedding or your child's university costs, rather than borrowing separately, and in some cases more expensively, for the outgoing itself.
To avoid moving home It can be cheaper and more convenient to adapt or add an extension to your existing home, paid for by remortgaging or a further advance, than to move home.
To consolidate your debts Remortgaging can allow you to release some of the equity you hold in your home and consolidate other debts, such as a car loan or credit cards, which can attract higher rates of interest than that of your mortgage.
To Reduce the Term
With each remortgage you can look at reducing the term of the loan bring the mortgage down by years eventually if this is the goal. Why might it not be ? Well you need to speak to me to find out.
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