What do I do when my mortgage deal ends?

What do I do when my mortgage deal ends?

What to do when my mortgage deal ends?

When you’re deal comes to an end you may be eligible to apply for another product with your existing lender or a remortgage to a new lender. There are a variety of reasons why a lender may refuse to offer you a follow-on deal such as not maintaining the agreement e.g. missed or late payments. Some lenders actually check the clients’ circumstances and may refuse or offer an inferior product if they choose. The easiest way to tell whether your lender may operate in this fashion is by looking to see if they advertise their follow-on deals on their website. IF they advertise them, you’d choose a good one. IF they don’t, they may just give you a duff deal and there isn’t really much you can do about it other than to either take it or remortgage (if you can).

What is a remortgage?

A remortgage is where you change to another lender, you effectively start from scratch with a new application and loan amount, you need a solicitor or conveyancer to complete the legal work and you will need to prove your income and identity etc. Many remortgage deals will offer free solicitors to complete the legal work or cashback which can be used to help pay for one. Be warned though whilst many are fine, you likely won’t receive the same standard of care and attention you might otherwise receive if you chose to pay for a conveyancer to do it for you. But you might pay around £600 for a mortgage so a freebie can be very appealing. They can be offered on a purchase too but these a very, very rare. When you’re remortgaging, it is possible to arrange further borrowing or to reduce the level of borrowing too if you have the funds to make up the difference with your current lender. The further borrowing can be for various reasons such as home improvements, to buy another property or to repay debt. Doing it to repay debt can be dangerous and expensive long term, for that reason many lenders and advisors are nervous of arranging it and that’s why we as advisors don’t really want to get involved with debt consolidation.


Can I borrow more money without remortgaging?

You can sometimes increase the borrowing with your existing lender if they allow it. This is generally referred to as a further advance. The names used by each lender can differ on various topics but the advisor should be savvy enough to understand what you’re asking for. Some lenders will allow you to top up with a standard deal, some have specific deals, others may make you take the standard variable rate. They generally do not allow you to add it to the existing deal. If they put your deal onto a deal with a tie-in period it could become a problem when your current deals ends as you could be tied to that lender. In this situation you have a choice of staying with that lender and taking whatever they give you, going onto the standard variable rate to wait for the penalties on the further borrowing to expire or to pay the early repayment charges. You could also consider a second charge mortgage, but these will usually be more expensive and will require a solicitor or conveyancer.


Can I get a second mortgage on my current home?

It is possible to attain a second mortgage, this would be with a different lender. These are typically more expensive than a first charge mortgage. When mortgages are set up and the legal charges registered, they are marked in date order with the first lender needing to grant permission for the second to be set up. The reason they need to give permission is it is felt that a second charge may weaken the financial status of the owner(s) as the further financial burden may increase the chances of the owner not being able to meet their financial commitments. That being said for the second charge lender to file for repossession the first charge lender would need to agree, if they didn’t the second charge lender would be limited in their options. In the event repossession did go ahead, the first charge lender would get their money back first, then if there is enough money left, the second charge lender would get their money. IF there isn’t, well there isn’t a great deal they can do about it.

 

 

Contact Financial Options Selby

 

Financial Options (Selby) Ltd
24, Finkle Street, Selby, North Yorkshire, YO8 4DS

 

Call: 01757 709888