The typical reasons for re-mortgaging are to get a better rate to consolidated debt or to release equity. You may also have to re-mortgage if you want to move house. Re-mortgaging doesn’t only occur when your mortgage term comes to an end, some people take out new mortgages simply to save money on their monthly repayments. Re-mortgaging should be relatively easy and straightforward if you are staying with your existing lender. If your lender does not contact you before your mortgage term expires then you can contact them and your lender can talk you through your options. If you are overwhelmed by all of the choices then you may get extra help from a mortgage broker. Not only will they be more adept at finding the right remortgage for you, they also have access to products that aren’t available direct to consumers. All mortgage brokers are bound by a code to treat all their customers fairly. Remember that they will charge you for their services. |
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Mortgage arrears or Mortgage repayment difficulties |
Mortgage arrears or Mortgage Repayment difficulties Contact your lender and agree a planMortgage lenders are keen to help their customers sort out any payment difficulties. Also, the law says they must treat you fairly and take your circumstances into account. They may be able to come to a payment arrangement with you. If you’re struggling to make your repaymentsDepending on your payment history and whether your difficulties are likely to be long or short term, your lender might agree to: - reduce your payments for a set period
- charge you interest only for a while, if you’ve got a repayment mortgage (usually you pay capital and interest)
- give you a ‘payment holiday’
- extend your mortgage term to reduce your payments
If you’re already in arrearsIf you’ve already fallen behind, your lender will suggest a way to pay off the arrears gradually, alongside your usual payments. If you can’t meet the extra payments, you may be able to delay them for a while or add them to your loan. Again, it depends on your track record. Always pay what you canPay as much as you can manage every month. Keeping up regular payments (even if they vary) shows that you’re committed. Your lender’s more likely to treat you sympathetically and you’ll minimize the arrears charges too. If you took out your mortgage on or after October 31 2004The Financial Service Authority (FSA) regulates most mortgages taken out from this date. Under FSA rules lenders must treat you fairly and send you regular statements to keep you informed about your current arrears position. There are also rules covering what the lender must do if it intends to repossess your home. |
This is where there is a set interest rate for a fixed period of time, and then at the end of the term the normal variable rate is paid. An arrangement fee is usually payable when taking out this type of mortgage. With Fixed rate there may be early redemption charge that may extend beyond the fixed rate term. For example the fixed rate may be for a period of three years but the penalty period may extend to five years, and you must pay the variable rate that the lender charges. A fixed rate may be chosen if you expect interest rates to rise generally, and enable you to plan your budgeting. |
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Older people are turning to equity release mortgages to enable them to free up some of the value in their properties. An equity release works by providing you with a regular income, or a cash lump sum. In return, you take out an interest-free loan which is paid off when the property is sold on your death.Or you can choose to sell a proportion of your home in return for the money. The first type of equity release mortgage is known as a lifetime mortgage, and the second is called a reversion scheme. The equity release can offer a sensible solution for the over 55s who want to supplement their income in retirement or fund home improvements, for example. Equity release has been around for a while, but many consumers have been wary about it in the past, but now lifetime mortgages are regulated by the Financial Services Authority and reversion scheme regulation was introduced. Many equity release lenders are members of the safe home income plans, so this means that all safe home income plan members have pledged to follow the SHIP code of practice which guarantees the safety of all their products. This means that you reserve the right to always live in your property until you die or have to go into a nursing home. Also the SHIP equity release comes with a no-negative equity guarantee, which means that no matter what happens to property prices, your family or estate will never be left with a debt that cannot be repaid by the sale of your property. This allows your family and you to have peace of mind. Some of the pros of an equity release is that it allows you to free up cash, increased competition means interest rates are falling and it enables you to stay in your own home. Some of the cons are that it is a very big commitment, it will reduce the inheritance you leave your family and it can impact on state benefits. |
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