Buying a property can be the biggest decision made in our lives. It is for this very reason that impartial advice is critical from competent and qualified advisers. Whether you are a first time buyer, looking to remortgage, purchase a second home or even looking to release equity to provide income in retirement.
For free, independent financial advice with no obligations, please feel free to contact Reel Estates so that we can arrange an appointment with our Recommended advisor from Genie Mortgages.
Remortgages can be used for various reasons. However, most people simply switch mortgages because it will work out cheaper for them. For example, the introductory discounted interest rate may have finished with your current lender; therefore you could potentially get a new discount rate, or a lower APR, with another lender. Another example is when you may need to re- mortgage to consolidate debts.
It is worth noting that a remortgage is not the best option in all cases. Even if the lender you are considering switching to is offering a lower APR, you must take into consideration the facts that:
The new lender may charge you for valuation and solicitors fees, even if you have already paid these for your mortgage with your current lender.
If you switch mortgage remember to look at the overall repayment period. You may be able to pay less monthly, but check the final repayment date of the mortgage as well.
Also you may be able to switch your mortgage deal with your current lender, avoiding any unnecessary costs. Many lenders will allow you to switch your mortgage deal reasonably frequently.
THINK CAREFULLY BEFORE SECURING OTHER DEBTS AGAINST YOUR HOME. YOUR HOME MAY BE REPOSSESSED IF YOU DO NOT KEEP UP REPAYMENTS ON A MORTGAGE OR OTHER DEBT SECURED AGAINST IT.
Securing short term debts against your home could increase the term over which they are paid and therefore increase the overall amount payable
You may have to pay an early repayment charge to your existing lender if you re-mortgage. You can choose how we are paid for mortgages; pay a fee or we can accept commission from the lender, or a combination of fee and commission.
Becoming a private landlord should not be seen as an easy way of making money. It can be riskier and more complicated. It can also be very time consuming, more than most forms of investment, and there is no guarantee that house prices will rise. That said, having a second property to let to tenants could reap considerable financial rewards over time.
Rent Potential - the decision as to whether or not a mortgage will be offered is based on the rent you will earn as well as your income. In some cases your income is not ever considered.
Interest Rate - buy to let mortgages have slightly higher interest.
Larger Deposit - typically a minimum of 20% or 25% of the property's value is required as a deposit.
When buying a second property to let, you will need to decide whether your primary objective is income or capital growth. In other words, are you looking to make a profit month on month or are you looking to make a profit through increased equity from the second property if it increases in value over time? The decision may affect the type of property you purchase, and the location.
When you manage a property there are many costs involved in addition to the monthly mortgage repayments. As a guide, you should be aiming to achieve a gross rent of about 135% of the rental property's interest only mortgage repayments in order to cover your costs should anything go wrong.
Property upkeep - maintenance costs for the property.
Letting agent's fees - letting agents charge around 10% of the monthly rent for finding and vetting tenants with an additional cost of around 5% if you require a full management service..
Ground rent / service charges - applicable to leasehold properties.
Legal insurance - to cover costs from evicting tenants in the event of non-payment, very important, as this can be very expensive.
Insurance - building insurance and contents insurance for the items provided as part of the rental agreement.
Furnishings - the purchase of any furniture. If the property is to be let furnished, make sure you are covered for this by your home insurance.
Gas / electrical appliances - cost of maintaining appliances and ensuring they comply with any regulations such as safety tests.
Decorating costs - the property may require work ranging from painting, to a new bathroom suite before it is suitable for letting to tenants.
When choosing a property to let, it is wise to take advice from local letting agents to determine; what types of properties are in need and which parts of the town are best or most wanted. They can tell you if there is a University in the town, and if students are looking for somewhere to live.
Your home may be repossessed if you do not keep up repayments on your mortgage(s).