Remortgage to utilise cash from your property
Raising money on your bricks and mortar is something our property team regularly advises upon, a recent survey shows that homeowners are remortgaging and the main reasons are; raising money to invest in buy-to-let properties, home improvements and to consolidate debt.
Why do people remortgage?
Despite soaring house sales prompted by the stamp duty relief scheme demand for rental property is still high and so buy-to-let landlords are looking to raise capital against other properties they own.
The information from ‘Knowledge Bank - a database of mortgage lending criteria’ shows by far the biggest mortgage lending criteria is buy-to-let, followed by remortgaging to renovate and capital raising for debt consolidation.
When clients come to us for advice on remortgaging it usually follows a similar pattern to this, in addition to obtaining a better rate of interest. Often a homeowners original mortgage deal is expiring and interest rates will be about to change to their lender’s standard variable rate (SVR), which is typically more expensive and so monthly money saving is a big incentive for our remortgage clients.
“While the concept is simple, the legalities can be complex, especially dealing with properties that may have long-standing covenants,” said Victoria Marshall, Head of Conveyancing at Pearson Solicitors in Oldham.
“If there are any other loans or other restrictions secured against the property, other legal steps must be taken before the remortgage can go ahead. At Pearson Solicitors we are registered with the panels of most mainstream lenders and if we’re not on a particular panel, we're happy to become a member in order to continue to represent a client’s interests during remortgaging. Meaning we can act for both you and your lender in the majority of transactions,” she added.
We’ve all been spending a lot more time at home recently and so if you’re thinking of an extension, or looking at making a home office then remortgaging may be the way to fund it. Similarly, having all your debts consolidated into one place with lower interest rates and securing unsecured debts against your home is one way to get on track – providing your home is not put at risk.
“This does of course mirror the two sides of the pandemic, those in employment who have been able to invest the money saved by the lack of hospitality and holidays and those who have struggled financially and need to secure debt.”
“Similarly, those who have lifetime mortgages against their property may benefit from re-mortgaging now that valuations of house prices are increasing. With a greater number of products on the market with specialist advice now may be the time to consider a re-mortgage of the old and outdated equity release product,” said Victoria.
Whilst remortgaging can save homeowners a huge amount of money, the costs associated with the process can sometimes be large and potentially have consequences. It is therefore highly recommended that you seek expert advice beforehand.Subscribe to our newsletter
Please note that the information and opinions contained in this article are not intended to be comprehensive, nor to provide legal advice. No responsibility for its accuracy or correctness is assumed by Pearson Solicitors and Financial Advisers Ltd or any of its members or employees. Professional legal advice should be obtained before taking, or refraining from taking, any action as a result of this article.
This blog was posted some time ago and its contents may now be out of date. For the latest legal position relating to these issues, get in touch with the author - or make an enquiry now.