Should I Port My Mortgage
There are two main reasons people port:
So if you are able to port and one or both of these factors apply to you, it may be beneficial to do so.
Probably the biggest downside of porting your mortgage is that youre limited to your lenders products and may be missing out on better deals being offered elsewhere.
Pro tip: If youve built up equity in your current home and therefore dont need to borrow as great a percentage of the value of your new home , youre likely to be able to access better rates than before.
Before you commit to porting, its a very good idea to speak to an independent broker or financial advisor who can access the whole of the market and make sure youre getting the best deal for your circumstances.
How Borrowing On Home Equity Works
You may be able to borrow money secured against your home equity. Typically, interest rates on loans secured against home equity can be much lower than other types of loans.
Not all financial institutions offer home equity financing options. Ask your financial institution which financing options they offer.
You must go through an approval process before you can borrow against your home equity. If youre approved, your lender may deposit the full amount you borrow in your bank account at once.
You can borrow up to 80% of the appraised value of your home.
From that amount, you must deduct the following:
- the balance on your mortgage
- your total HELOC amount, if you have one
- any other loans secured against your home
Your lender may agree to refinance your home with the following options:
- a second mortgage
- a loan or line of credit secured with your home
I Own My Property Outright Can I Remortgage
Yes.
However, as with any mortgage application, there are certain eligibility and affordability criteria.
These are very similar to other remortgage applications you may have made in the past, where the lender looks at:
- The value of your property
- The amount you want to borrow
- Your ability to repay the mortgage debt
When looking to remortgage a property you own outright, the lender will also want to know:
- What you intend to do with the money
Some common examples that lenders tend to accept are buying a second house or renovating your current one. If you plan on investing the funds into a business, for instance, you may struggle to get a mortgage offer.
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Unencumbered Mortgage With Bad Credit
If you have bad credit and need a mortgage on an unencumbered home, then it will be difficult, but not impossible!
Poor credit certainly limits the options of which lenders you can go to, but there are adverse credit lenders that may consider you.
The more recent your credit issues are, the more difficult mortgages become. Historic credit issues over six years ago, should enable you some pretty competitive deals.
The type of credit problems will also be a factor in whether or not youll be accepted for a mortgage. Late payments and defaults are of course less severe than bankruptcy and repossession.
Can I Lease A House With A Mortgage On It
Homeowners seek to rent their homes out for a variety of reasons, including when their employers transfer them to new locations. A homeowner might also seek to lease out her house to profit from it as a rental property. Homeowners can generally lease their homes out as they wish, though they might run into a few problems if those homes are also mortgaged. In some cases, mortgage lenders may even prohibit borrowers from leasing their homes out.
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What Happens When Porting A Mortgage To A Cheaper House
If youre moving to a cheaper property and that means you need to borrow less, porting could be a very good option for you, especially if youre on an attractive interest rate.
If your circumstances havent changed since your original mortgage application, you should have no problem satisfying your existing lenders criteria.
Do be aware that if your mortgage has an early repayment charge that charge will probably be applied to the difference between the two loan amounts.
For example:
Can I Remortgage My Shared Ownership Home
The answer is probably. This is a specialist form of lending and you need a lender that offers . Some lenders will offer their full range, whilst others will have specific shared ownership rates. Our mortgage advisers know where to look. If you wish to capital raise, to purchase an additional share of your shared ownership property known as stair casing, our mortgage advisers can help with this too
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What Can You Do With The Money You Borrow
You are free to do what you want with the money. But bear in mind that the interest you are charged is based on the amount you borrow. If you take more than you need and leave it in a low-interest account you could end up paying more in interest on the money you borrowed than you earn in a deposit account. Your debt will also be larger than it needs to be. Also do not take out a lifetime mortgage in order to fund investments.
Reasons To Buy A Second Home
Buying a second home might be a great way for you to be closer to the people you love and places you enjoy, or it might help you accomplish your financial goals. Here are some of the biggest reasons for buying a second home:
- Designated vacation spot: If you and your family love the mountains but are tied to the city for work, you might be able to spend more time getting away if you have a vacationhouse in a place that you love to be. The same goes for if you have people or other places you want to establish a home near.
- A place to retire: If you plan to move after you retire, you can get a head start on creating a community in a place you love by purchasing a second home. You can use the home as a retreat for now and retire to it later.
- Diversifying your assets: Homes tend to increase in value, so you can use your second home as a means of diversifying your investments. You can choose to keep or sell your home down the road.
- Rental income: If you decide to rent your home, you can earn rental income to help cover the expenses of owning a second home. If you want to vacation at your home, you can rent it out short-term. If you decide to have it only as an investment property, you can rent to individuals or families on annual leases.
- Potential tax breaks: Many people choose to leave their second homes unoccupied when theyre not using them. If this is the case, the interest and property taxes may be fully deductible from your gross income.
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How Much Could You Get From Selling A Share In Your Home
You get much less than the market value of the share you sell. This is because the home reversion company may have to wait several years before they can cash in their share. So, the older you are when you sell a share in your home, the more money you will get.
Due to different life expectancies, a single man of the same age would receive more money than a single woman, as he is expected to live for a shorter time. A couple would receive less, as it is expected that one of them will live longer than both would if they were both single.
What Mortgage Lenders Want
You also need to consider the front-end debt-to-income ratio, which calculates your income vis-à-vis the monthly debt you would incur from housing expenses alone, such as mortgage payments and mortgage insurance.
Usually, lenders like that ratio to be no more than 28%. For example, if your income is $4,000 per month, you would have trouble getting approved for $1,720 in monthly housing expenses even if you have no other obligations. For a front-end DTI of 28%, your housing costs should be under $1,120.
Why wouldn’t you be able to use your full debt-to-income ratio if you don’t have other debt? Basically, because lenders don’t like you living on the edge. Financial misfortunes happenyou lose your job, your car gets totaled, a medical disability prevents you from working for a while. If your mortgage is 43% of your income, you’d have no wiggle room for when you want to or have to incur additional expenses.
Most mortgages are long-term commitments. Keep in mind that you may be making those payments every month for the next 30 years. Accordingly, you should evaluate the reliability of your primary source of income. You should also consider your prospects for the future and the likelihood that your expenses will rise over time.
Getting approved for a mortgage up to a certain amount doesnt mean you can actually afford the payments, so be honest about the level of financial risk that you are comfortable living with.
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Do I Need A New Mortgage When Moving Home
- If youre not able to port your existing mortgage, you will need to apply for a new one.
- Your existing mortgage loan will be repaid by your solicitor or licensed conveyancer on completion of your sale.
- Do be aware that if you have not been in your current home very long and are still within an initial introductory offer period on your existing mortgage which usually means youre on a discounted interest rate you are likely to have an early repayment charge.
- If that is the case, it could cost you money to pay back the loan early, which can add up as it maybe 3% to 5% of the outstanding loan amount.
Can I Sell My Home Before The Mortgage Term Is Up
Yes!
- You can sell your home at any time, as long as you can afford to.
- If youre redeeming your mortgage in full and not buying another property, you must make sure that the sale price is higher than the amount remaining on your mortgage loan.
- If you are in negative equity because prices have fallen in your area and your home is worth less than it was when you bought it, selling may not be financially viable for you.
- The good news is that this is relatively rare, but it can be an issue in times of recession or in specific areas where there is an oversupply of your particular type of property and very little demand.
Whether youre intending to buy another home or not, there are likely to be costs and possibly financial penalties if youre looking to redeem all or part of your mortgage, particularly if youre still within the period where an early repayment charge applies.
So the first thing to do is check the terms of your current mortgage.
- You can do that yourself, with your lender or by consulting an independent mortgage broker or financial advisor.
- All you need to do is request the terms and conditions of your mortgage, which can take up to 10 days for them to deliver.
Pro tip: The benefit of taking independent advice is finding a broker/adviser who has access to the whole mortgage marketplace and will be able to highlight any deals that might be better for your circumstances.
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It’s a good feeling being mortgage-free. But life can always throw up a few occasions when it may be necessary or prudent to remortgage a house that you own outright.
Remortgaging gives you access to a big lump sum and because the loan is secured against your property, you could get the money at a lower interest rate than other types of finance.
Of course, you will be required to pay the loan back in full over the course of the term. And as the loan is secured on your house, you may lose the property should you fail to keep up these repayments.
Remortgage An Inherited Property
Dealing with an inherited property often results in mixed emotions. It can be a difficult time, but the process of transferring ownership of an estate still needs to be carried out.
Inheritance can have complications, such as family disputes or unknown restrictions and charges on an estate. Your solicitor has a legal obligation to represent your best interests during the inheritance process and will make you aware of what youre legally entitled to do.
If youve inherited an unencumbered property, you may wish to remortgage the home to release capital. The capital can then be used to purchase a home for you to live in, whilst the inherited property is put on rent.
This is more commonly known as let-to-buy. This isnt always easy to do, as most lenders want ownership to be at least six months prior to a remortgage.
Despite certain restrictions, our advisors are experts and have access to specialist lenders that will consider circumstances such as these. You can make an enquiry now and an advisor will call you right back.
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Getting A Second Mortgage
A second mortgage is a second loan that you take on your home. You can borrow up to 80% of the appraised value of your home, minus the balance on your first mortgage.
The loan is secured against your home equity. While you pay off your second mortgage, you also need continue to pay off your first mortgage.
If you cant make your payments and your loan goes into default, you may lose your home. If thats the case, your home will be sold to pay off both your first and second mortgages. Your first mortgage lender would be paid first.
Can You Get A Mortgage On A Paid Off Home
Yes, you can get a mortgage on a home where a mortgage has already been paid off on.
There is no restriction on this and it is even more likely that you will get a mortgage on a paid-off home as the owner will hopefully own 100% of the home if they dont have any secured debts such as home improvement loans on the home.
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Insurance And Home Maintenance
For all equity release schemes you must:
- keep your home in a good state of repair
- insure your home, noting the lenders or home reversion companys interest in the policy
Maintenance costs can be high, particularly as your home gets older. The lender or home reversion company can inspect your home from time to time and they can carry out repairs that you must pay for if you dont maintain your home to their standard. If you have a lifetime mortgage, repair costs will be added to the amount you owe, so interest would be charged on those costs.
Also bear in mind that some schemes may prevent you from making certain renovations to your home, as your provider may consider that they reduce the value of your home. Such renovations could include installing ramps, lifts or railings, which you may need in the future, so ask your provider what their policy is on this.
Can I Mortgage My Home If I Own It Outright
A home that you own outright has equity value. If you take out a mortgage on a home that you own, you can utilise the equity in a few different ways. If your finances are sound and you have a good credit history and score with a good ratio of debt to income, one of the following options is available to you.
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Determine The Location Of Your Second Home
When buying a second home, its very important to consider the location. If you plan to use it as a vacation home, youll want it to be far enough from your primary living space that it feels like youre getting away from the world, but not so far away that you rarely get to travel there. If you plan on hosting family a lot, you may also want to consider looking for a property thats centrally located within a few hours of everyone.
Some other factors related to location that potential buyers ought to think about are the attractions in the area that drew you there in the first place, quality of the surrounding neighborhood especially if youre renting the property out to other tenants and what the weather/climate is like throughout the year.
For example, you might think moving to Florida sounds great but end up in a town further from the beach than you expected or realize you dont enjoy the heat and humidity. Do your research before purchasing a property.
How Many Years Do I Need On My Lease To Remortgage My Leasehold Flat
On average lenders require around 70 years left on your lease at time of mortgage application. Although a few lenders will consider less, or will work from the years required at the end of your mortgage term. If your lease is short, it may be worth finding out how much it would cost to extend it, if possible, before you remortgage. As a longer lease may give you access to a better mortgage rate. Speak to us to review your options.
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