Is now the right time to Remortgage?

In my career as a mortgage broker I have more often than not recommended taking a two year deal out to clients, of course individual circumstances are important to consider but in the main two year deals have been incredibly popular.

If you are someone who fixed their deal two years ago you will have been one of the lucky homeowners taking a deal when the lowest ever average two year fixed rates were available (this was September 2017 according to Moneyfacts, the average two year fixed was 2.17%).

This will mean that in the next month or two if you haven’t already done something about it your mortgage payment is going to jump onto the lender’s standard variable rate. I remember organising some deals with Accord Mortgages a couple of years ago that were at a fantastic fixed rate of 0.99%. I told my clients that they were unlikely to get this sort of deal again. Accord have a standard variable rate of 4.99% so the interest charged to you will be five times higher if you do nothing.

Luckily it is relatively easy to switch mortgage deal these days and more and more lenders are offering competitive deals to their existing customers. Historically this was not the case but lenders are realising the best customers they can get are the ones they already have.

Speak to your broker and have a look at what your existing lender can do. Often I find that the existing lender doesn’t have necessarily the lowest rate available but to save on the hassle factor it can be easier to stick with them rather than change lender and have to involve third party solicitors that can frustrate the process.

Rates are still very competitive but there aren’t any deals at less that 1% fixed today, however there are plenty of deals at around the 1.5% mark for two years and the five year fixed options are being exercised by many people with competition here pushing the five year rates (as long as you have sufficient equity) well below 2%.

Hopefully your broker has been in touch to remind you that your deal is coming to an end, also lenders will usually write to you to let you know so that you have enough time to do something about it. If not then hopefully this article will prompt you into action. Needless to say if you happen to end up on the standard variable rate then when the mortgage payment goes out of your account you’ll probably sit up and notice.

A MORTGAGE IS A LOAN SECURED AGAINST YOUR HOME OR PROPERTY. YOUR HOME OR PROPERTY  MAY BE REPOSSESSED IF YOU DO NOT KEEP UP REPAYMENTS ON YOUR MORTGAGE OR ANY OTHER DEBT SECURED ON IT. 

YOU MAY HAVE TO PAY AN EARLY REPAYMENT CHARGE TO YOUR EXISTING LENDER IF YOU REMORTGAGE.

Thinking of Buying a Second Home?

Thinking of Buying a Second Property? Here’s my story:

Last year I wrote about developing my family home with the idea of increasing its value. I was fortunate to be able to add value to my property and now that the building work is all but over (it never really stops does it!) we are ready to embark on another journey.

Every year we holiday as a family in the beautiful Lake District, my wife and I have always said we would love to own a property there but have never really been in a position to do anything other than dream, until now.

It seems that the stars are lined up in our favour at the moment as the house has increased in value and we are now looking to release equity and use that to go towards a second home.

We don’t have a big stash of cash anywhere so we are borrowing money to buy somewhere. It is a risky approach but due to the mortgage offerings in the marketplace I feel it is a calculated risk.

If you are thinking this might be something you want to do then read on. Firstly you need to aim for at least a 25% deposit, in my case this is coming from the equity being released from a remortgage. Yo will also need to account for stamp duty and this carries an extra 3% tag on it as it is not going to be a main residence.

Have a think about what you are going to use the property for. If it is solely for personal use then you may be able to get a standard residential mortgage, these are subject to affordability and the lender will assess your income to ensure you can afford to run two properties. There is an interesting product available from Metro Bank at the moment that allows you to let the property for up to 90 days a year. This could help you making the mortgage payments. Also you will only need a maximum of 15% deposit so you can leverage a little here.

Do you want to let the property? If so there are a couple of approaches you could take. Income from the property will be taxed at your highest tax rate so you need to take advice from an accountant in this regard. Inland revenue rules state that if the property is a furnished holiday let and is let for 105 days per year or more the new income tax rules for rental income do not apply and mortgage interest can be a tax deductible expense. If you are taking up a holiday let product the Furness Building Society have a good product but you need a 25% deposit and the rates are not as competitive as a standard residential mortgage. The good thing about Furness though is that they allow you to use the property yourself as well whereas other holiday let providers do not.

This is not the property I have in mind!

At the moment I’m still looking for the right property so have yet to take the plunge. However whether it is the Lake District, Scotland, Cornwall or Blackpool if you are in the position of having a decent amount of equity to leverage then you don’t necessarily need cash in the bank to get that second property.

A MORTGAGE IS A LOAN SECURED AGAINST YOUR HOME OR PROPERTY. YOUR HOME OR PROPERTY  MAY BE REPOSSESSED IF YOU DO NOT KEEP UP REPAYMENTS ON YOUR MORTGAGE OR ANY OTHER DEBT SECURED ON IT. 

Home improvement loan vs remortgage: How to finance your renovations

Planning on extending your home or have aspirations to reconfigure your current property? While the prospect is exciting, you may be wondering if you can afford it and what financing routes might be open to you to fund the project.

If you don’t have the funds readily available, the main ways to finance your home improvements will be to secure a home improvement loan or to remortgage. Each have their benefits, and drawbacks, and what suits one project, might not suit the next. In this article, we discuss each financing method to help you understand which route you should take.

Home improvement loan vs remortgage: Which is right for me?

Remortgaging

One way to finance your home improvement project is to remortgage. That means releasing equity from your property to remodel or extend your home. However, that does means you’ll need significant equity in your property to raise the funds required to carry out the project.

For example, if your property has a value of £300,000 and you have an outstanding mortgage of £250,000, you have £50,000 of equity in the property that can be released (although it’s unlikely you’ll be able to release it all).

Usually when you remortgage, your lender will pick up some of the fees, such as the valuation fee and legal fees, so if you think you have enough equity in your home to remortgage, then it can be a really cost effective way of funding your project.

Things to consider when remortgaging

• You will need to inform your lender that you are making alternations to your property and make sure you inform your buildings insurance provider too

• You’ll still be subject to the checks required when securing an ordinary mortgage. Your lender will need to make sure that your income is sufficient and that you can keep making the repayments until the end of the contract

• Your may have to pay redemption charges to your original lender

• By remortgaging, you’ll be increasing the amount of borrowing secured against your home and therefore your monthly repayments might increase

 Home improvement loan

If remortgaging isn’t suitable, then you could finance your home improvements with a home improvement loan.

A home improvement loan works just like any other type of loan. You’ll need to pass a credit check and the lender will assess your income before determining how much you can borrow. Then, over an agreed period (usually up to 5 years) you’ll pay the loan back via monthly direct debits.

With a home improvement loan, you can usually borrow up to £50,000 – but the better interest rates usually come attached to smaller loans of between £5,000 and £25,000.

You can have your home improvement loan secured against your property or not, and although your risk is higher when securing it against your home, your interest rate will usually be better.

Things to consider when choosing a home improvement loan

• Providers can be sneaky with their advertised representative APRs. That’s because only 51% of successful applications need to get that rate for it to be representative and the rate you are offered will be dependant on your income and credit rating

• The best home improvement loan interest rates are usually reserved for borrowers making payments over three to five years. So, if you are looking to pay back your loan in a shorter period than that, your interest rate might be considerably higher

• If you secure the loan against your property, you do risk your home being repossessed if you can’t keep up with the repayments

 Which option should you choose?

The most suitable way for you to finance your home improvements will be dependant on your circumstances. While remortgaging usually comes with cheaper monthly repayments than a home improvement loan, it does require you to have enough equity already in your property.

Alternatively, while you may get an attractive interest rate with a home improvement loan, you might not be able to borrow as much as you had hoped.

In any event, the best option would be to seek the advice of a professional who can talk you through your options and assess your personal circumstances to advise which product would best suit you. You might want to consider talking to your bank, a financial advisor or a mortgage advisor.

If you’d like to talk to a mortgage advisor about raising funds for your home improvement project – why not give The Surrey Mortgage Broker a call? You can find out more about The Surrey Mortgage Broker by visiting us here or you can contact Richard Bousfield on 01252 759233 or info@thesurreymortgagebroker.co.uk.

A MORTGAGE IS A LOAN SECURED AGAINST YOUR HOME OR PROPERTY. YOUR HOME OR PROPERTY  MAY BE REPOSSESSED IF YOU DO NOT KEEP UP REPAYMENTS ON YOUR MORTGAGE OR ANY OTHER DEBT SECURED ON IT. 

YOU MAY HAVE TO PAY AN EARlY REPAYMENT CHARGE TO YOUR EXISTING LENDER IF YOU REMORTGAGE.

Coming to the end of your fixed rate mortgage deal? Here’s what to do next

If you’re coming to the end of your fixed rate mortgage deal, there are a few options open to you and the route you take will be dependant on your circumstances. Whether you previously fixed for five years or just two, interest rates and mortgage deals can look very different from when you signed your last contract. So, it’s best to explore all your options before rushing into your next agreement.

What should you do when your fixed rate mortgage deal comes to an end?

There are four main options open to you when your fixed mortgage deal comes to an end. These include:

1) Paying the higher standard variable rate

When your fixed rate mortgage deal comes to an end, you’ll automatically be transferred onto the higher standard variable rate if you do not take action. While this may suit some people, for most, it usually isn’t the best option.

The Pros

If you opt to go onto the higher standard variable rate, you’ll no longer be bound by early repayment charges. That means you can overpay your mortgage as much as you like, or even pay it off in full, without facing any sanctions. That’s perfect if you want to clear your mortgage debt quicker or have found yourself in a position where you can pay the rest of the debt off entirely.

There is also the potential that the interest rate will go down. Although, when you initially move onto a standard variable rate mortgage the interest rate is likely to be higher than what you were previously paying, there is the potential that the lender will lower their rates in the future and therefore your monthly repayments will be reduced.

You also won’t be faced with any arrangement fees or other costs involved with securing a new mortgage deal.

The Cons

The main downfall of standard variable rate mortgages is the higher interest rates they are usually associated with. When you first move onto a standard variable rate, you’ll probably notice that your monthly repayments go up.

The flexible nature of the loan means that at any given moment, the lender can put their interest rates up and you may end up with monthly repayments which you cannot afford.

2) Get another fixed rate deal from your current lender

Once your fixed rate mortgage deal has come to an end, you’ll have the opportunity to secure another fixed rate deal from your current lender.

The Pros

By staying with the same provider, you won’t have to pay the fees associated with legal paperwork and valuations. You would’ve already gone through this process when you first secured a deal with the lender, so they’ll already have all the information they need about your property.

It also means that you can secure your new deal a lot quicker. Paperwork and valuations associated with moving to a new lender can take a few months to sort and organise, but you can often secure a new deal with your current provider within a matter of days.

The Cons

The main issue with moving to a new deal with the same lender is that they may not be offering the best deal in the market. You might find that other lenders will be willing to give you deals with much better interest rates; saving you money on your monthly repayments.

3) Get a different mortgage with your current lender

When you reach the end of your fixed rate mortgage deal, you might realise you no longer want to be on a fixed deal. And if the standard variable rate doesn’t suit, there are other mortgage products you could explore such as tracker mortgages, interest-only mortgages or offset mortgages.

The Pros

While the pros of each of these mortgage types will be different, the one thing they have in common is flexibility. Whether that’s no early repayment charges or flexibility on how you save to pay off your mortgage, they tend to be less rigid than fixed rate deals.

The Cons

These mortgage types can change, the interest rate you are paying could go up and so leave you out of pocket. Generally, as well, if you want more flexibility then that comes at a premium.

4) Remortgage to a new lender

At the end of your fixed rate mortgage deal, you’ll also have the option to move to a new lender.

The Pros

The main reason why you might remortgage to a new lender is to secure a preferential rate. Often, a new lender might be able to offer you a better deal than what your current lender can offer you, and you’ll be able to make savings on your monthly repayments.

Other pros include freebies, incentives, and cashback which many lenders now offer their customers to entice new business. For example, they may pay your arrangement fee for you, or give you a sum of money after you’ve completed (often to cover the legal fees).

The Cons

While some lenders might cover arrangement and legal fees for you, others won’t. So, it’s important to check what costs might be involved when making a move to a new lender.

The Next Steps

If you’re 3-4 months out from the end of your current fixed rate mortgage deal, now is the best time to start considering your options. If you want help determining the best route for you based on your circumstances, why not get in touch with The Surrey Mortgage Broker?

We’ll be happy to offer you a no obligation, free initial consultation to help you understand which of these options are open to you, and which would be the best choice moving forward.

You can contact Richard on info@thesurreymortgagebroker.co.uk or call him on 01252 759233.

A MORTGAGE IS A LOAN SECURED AGAINST YOUR HOME OR PROPERTY. YOUR HOME OR PROPERTY  MAY BE REPOSSESSED IF YOU DO NOT KEEP UP REPAYMENTS ON YOUR MORTGAGE OR ANY OTHER DEBT SECURED ON IT. 

YOU MAY HAVE TO PAY AN EARlY REPAYMENT CHARGE TO YOUR EXISTING LENDER IF YOU REMORTGAGE.

The best places to raise a family in Surrey

Are you starting a family and looking to buy a property in Surrey? Perhaps you’ve been renting, and now you want to buy your first family home?

We understand that buying a family home is a very important decision and choosing the area to raise your children probably relies on a combination of great schools, low crime rates and access to activities.

Based on this, we’ve pulled together seven of the best family places to live in Surrey to kick start your property search. In no particular order:

1. Woking

Woking is one of Surrey’s largest towns, located in the northwest of the county. The town was recently ranked the 54 best place to raise a family in the whole of the UK, scoring particularly well for its NCT community.

Woking has also been recognised as one of the best places to live in Surrey for schools, with its St John the Baptist School ranking number one in the county for state secondary schools and number 23 across the whole of the UK.

Being one of Surrey’s largest towns, there is also a plethora of activities for children including a theatre, adventure play areas, horse riding and arts and crafts events. 

2. Guildford

Guildford is a popular Surrey town. Its location, 27 miles southwest of London, makes it a popular commuter town while also being a great place to raise a family. The town was named as the 6 best place to raise a familyin and around the London area.

If schools are your priority, Guildford is a great choice; housing three or Surrey’s top ten state secondary schools. Its St Peter’s Catholic School ranks 6th in the county (151th nationwide), the Guildford County School ranks 9th in the county (316th nationwide), and the George Abbot School ranks 10th in the county (327thnationwide).

If living in the heart of a busy town doesn’t appeal, then nearby smaller towns of Bramley, Shamley Green, Blackheath, Wonersh, Hascombe, and Winterfold might be worth considering due to their low crime rate; with figures showing this area is the 2nd safest place to live in Surrey. 

3. Farnham

Farnham is an old English rural market town to the west of the county. Although located 35 miles southwest of London, Farnham provides great commuter links into the city. The area is also particularly good for families, with the town housing All Hallows Catholic School – the 3rd best school in the county and 79th best school nationwide.

If busy town life doesn’t appeal, the suburbs of Tilford, Elstead, Thursley, Frensham, Peper Harow & Dockenfield are worth considering due to their low crime rates; with an average of just 24 crimes reported here per month.

4. Walton-on-Thames, Esher, and Chertsey

Walton-on-Thames has been voted the number one place to raise a family in and around the London area. It scores 96/100, with factors such as schools, health, job prospects and crime taken into account. Esher in Surrey was named number four in the same study.

Nearby Chertsey has also been recognised as a great place to raise a family in Surrey, being recognised as the 28th best place for families in the UK and noted for its particularly good childcare. Feltham ranked 52nd in the same report, commended for its good schools.

But it is, in fact, Chertsey and Sunbury with the best schools in this area of Surrey; with Salesian School in Chertsey being ranked 5 in the county and St Paul’s Catholic College in Sunbury ranked 7th.

The areas of South Walton & Ambleside are particularly suited to families; being named the 4th safest area to live in Surrey with just 27 crimes per month on average.

5. Warlingham

Warlingham is in the Tandridge district of Surrey, 14 miles south of London. It’s been voted the 19th best place in the whole of the country to raise a family, particularly commended for its great variety of activities.

Activities for families in Walingham include Zorbing, farm visits and plenty of countryside and woods to explore.

6. Leatherhead and Epsom

The Leatherhead and Epsom area is one of the best family places to live in Surrey if schools are a priority. Leatherhead has the 2nd best state school in the county (St Andrew’s Catholic School), and Epsom has the 8thbest (Rosebery School).

If travel to London is also an important part of your house search, these areas also offer good commuter links.

7. Chobham & Bagshot

Chobham and Bagshot are located in the northwest area of Surrey. They’ve been recognised as particularly good areas to raise a family, with Bagshot known for its range of family activities, and Chobham recognised for its great schools.

Bagshot has been named as the 30th best place in the UK to raise a family and Chobham the 86th.

Kick start your search

It’s important to know how much you can borrow before you start looking. You might have your heart set on a property you can’t afford, or you may be able to borrow more than you realise.

Before you begin your search, talk to a mortgage broker who will be able to advise how much you can borrow based on your personal circumstances. Then, once you’ve found your perfect family home, they’ll be able to find you the best mortgage deal on the market.

Want some advice today? Contact Richard Bousfield, The Surrey Mortgage Broker, who will be happy to offer an initial free mortgage consultation.

Alternatively, why not download our helpful Buyers Guide to Mortgages to help you navigate through the complex house buying and mortgage landscape?

A MORTGAGE IS A LOAN SECURED AGAINST YOUR HOME OR PROPERTY. YOUR HOME OR PROPERTY  MAY BE REPOSSESSED IF YOU DO NOT KEEP UP REPAYMENTS ON YOUR MORTGAGE OR ANY OTHER DEBT SECURED ON IT.