Remortgage and the UK Self Employed

Self Certification Mortgages

The term self-certification was introduced over a decade ago to help the self-employed to self certify their incomes. Today this same concept exists in the commercial sector, for the self employed sole proprietor, partnerships and a Limited Company.

Whole of market mortgage brokers know that individuals should be treated on their own merits and also know that it is not a perfect world. There will be times of hardship, losses incurred and as a consequence a business may incur adverse credit problems. Regardless of these problems a business has to survive, prosper and expand to the best of its ability and with this in mind they have developed strong links with lenders who will take all these previous problems into consideration and lend up to 85% - 95% of the property value, without the need for accounts or an accountants letter.

Self-Certification has limits:

Most mortgage lenders will only allow you to prove your income in this way if you want to borrow up to 75% loan to value, so you will need to put down a substantial deposit. However, some lenders may allow the self-employed to borrow up to 85% - 95% on a self-certification basis and the commercial mortgage broker is there to help by finding the cheapest and the most flexible commercial mortgage loans.

Finding the right remortgage is a very important financial decision in life as it is more often than not the largest single expenditure in people's lives! People will often search the supermarkets shelves for bargains choosing products for the sake of a 1p or 2p saving per item and there's nothing wrong with that; I do it all the time.

Our parents teach us to be frugal with money in our up bringing and we sometimes become animals of habit throughout our lives. Through the generations, inflation has seen prices increase ten fold and who would have thought years ago that the price of a loaf would touch the £1 figure.

The same can be said about UK property, as the housing market has exploded and the average mortgage has gone way above the £100,000 figure. This is before we align our currency and interest rate with the euro. Ireland has seen a massive explosion in property prices in the post years of joining the euro and it is now an extremely expensive place to buy property.

By comparison the UK property market is still cheap and I dread to think what will happen to property prices when the UK eventually aligns itself with the euro and interest rates are reduced to 3.5%. Will we see the average UK mortgage at the £200,000 figure?

An Englishman's house is his castle but for the average homeowner with the average mortgage that is now in excess of the £100,000 it is an extremely expensive commodity. Many people do not realise that it could pay them to review and move their mortgages by remortgaging on a regular basis and the simple arithmetical advantages of this could be in the thousands as a consequence.

UK Remortgages

Consider this as a normal mathematical comparison. A 2% saving on a £100,000 mortgage works out at £2,000 per year and assuming that this saving can be made every year by moving the mortgage to another lender, it equates to an astronomical £50,000 saving over the normal mortgage term of 25 years. It just doesn't make sense to be putting £40 a week into a lenders pockets when they already make billions of £££'s net profit per year.

Most of us have all experienced hard times at some stage in our lives and received letters from banks telling us that they are going to charge us £27 for bouncing a cheque or non payment of a direct debit or standing order. Now is the time to hit back and take some of that money back from them by taking advantage of the discounts that they have to offer to borrowers. So, if there is massive saving around like that, why do people not remortgage more often?

Remortgaging can help you if you are struggling with payments or you need to free up some money. However, you should think carefully about whether or not remortgaging will be beneficial to you in the long-term but if you have a problem remortgage it could be the ideal situation.

What is a remortgage anyway?

A remortgage is when you replace your existing mortgage loan with a new one from either the same lender or a new lender. This is usually done to reduce monthly payments or to release equity. Remortgaging is usually carried out through a remortgage broker, who will then introduce you to remortgage lenders, arrange remortgage quotes and secure the best remortgage rates.

What is a problem remortgage?

A problem remortgage is suitable for people with an adverse or bad credit history. As previously highlighted, research in the UK has indicated that as many as 1 in 4 people have had an adverse credit history in the past. For this reason, these people need to be given advice by specialist whole of market remortgage brokers, as they have access to all the best problem remortgage lenders and as a consequence they can find the a cheap remortgage from the best remortgage lenders

Remortgaging for lower payments

One of the most common reasons to re-mortgage is to get lower monthly payments than you do now. If you are struggling to pay off your monthly payments, then you need to look for a better deal, as soon as you can. If you can find a new alternate lender, then ask your current mortgage lender if they can match the new remortgage lenders quote, if they would prefer to keep you as a customer at a lower rate rather than lose you altogether. If they cannot match the rate then you should look at remortgaging but don’t bury your head as the problem will not go away.

Remortgaging to release equity

Another reason why people remortgage is to get hold of some extra money by releasing equity they may have built up in their property. This means that you borrow more than your current mortgage debt to release the money you have already paid into the property and this extra money may be used for debt consolidation or home improvements. This is especially useful if your property has gone up in price or if you have paid off a large percentage of your mortgage. It is like getting out a loan, but the rates are low as they are part of the remortgage.

Some Pitfalls of Remortgages

One thing that you should look at before remortgaging is whether or not it is really right for you. There maybe a number of costs involved, such as legal fees and penalties for changing mortgages. These fees could add up and might be more than you can afford. Also, if you borrow more money or you get lower monthly payments, it could mean that you will be paying the money back for a longer period of time.

Although it may seem helpful now, you could end up paying more long-term and if you are still paying the money back when you retired you might be left unable to make the payments without pension provisions.