A large number of home-owners in the UK, do not realize the implications of taking out a mortgage. Before you buy a property, you must understand that you are making a commitment for between 25 – 30 years. Depending on the type of mortgage product you choose, you will be required to change lenders after a set time. If interest rates go up by just a couple of percent during this period it can mean when you come to remortgage; you are in financial difficulty. This is due to the rise of money you have to pay back each month.
Remortgage Risks
There are also some risks attached to the price of the asset. Most buyers make the mistake that they think prices will continue to rise. History shows us that is not the case and around every ten years, we see a correction in the market. The last price crash happened in 2007/08 and led to the worldwide recession. It is nine years since it last happened, so it is likely that the prices of houses will fall over the next couple of years.
Price of Houses
If houses prices go down, the loan amount will owe remains the same. You will have to pay a monthly cost each month for an asset which is not worth the value of the mortgage. This is not too bad if you do not plan to move any-time soon as prices should recover over time. If you do want to move though you could be forced to pay thousands of pounds to cover the loss of the property. Most people are unable to do that so it can lead to a very difficult situation. It can be horrible if you own a home with a partner who you are splitting up from. Many couples are forced to continue to live with each other even after they split because they just can not afford to move.
Planning Ahead
One of the best pieces of advice is to plan ahead so that you do not get in a tricky situation. Before taking out a mortgage make sure you carefully read the terms and conditions along with speaking to a remortgage solicitor. They will be able to explain the risks so that you can plan ahead. With zero planning you could end up getting yourself into financial difficulty. Try and set budgets and always if you are able to, put money away each month. You will then be able to pay for any unexpected costs and not have to go into debt to pay for them.
When You Should Not Remortgage
Do not remortgage your home to take out cash if you do not need to. The equity in the property should act as a safeguard to cover you in the event of a property downturn. If you keep on taking out cash when remortgaging, you are never going to be able to pay back the loan. Also, if interest rates go up, you will be paying a lot more money back over the term of the mortgage.
There are thousands of different mortgage products out there so make sure you speak with a broker about which is best for you. You can also talk to a remortgage solicitor who will be able to explain all the legal terms to you so you can fully understand what you are entering into.
How To Remortgage Your House
Before you remortgage your house, speak with an IFA or mortgage broker. They are experts in this field and will be able to recommend you the best way forward for your personal situation. Brokers also have the ability to search the whole of the mortgage market. They will be able to find the cheapest deals and save you money on the remortgaging costs. They should also be able to recommend a great conveyancing lawyer to assist with the legal work. Before you hire though, make sure to compare the costs as it is the only way to know if you are getting a good deal or not.
Remortgage Solicitors Conveyancing Costs
Once you have found the perfect mortgage product, you will need to find a house conveyancing company to handle the legal side. Make sure you use a comparison site to find the best remortgage solicitors costs. You will need to select a conveyancer approved by the lender that you have chosen. If they are not approved or not willing to approve them, you will need to change conveyance lawyers. The lender will be able to give you a list of conveyancers you can use for the transaction.
Daniel Kay has worked in the financial sector for the last 12 years. He has built up and exceptional knowledge base and helps people save money. Daniel has built a website to help people compare House Conveyancing and remortgage quotes fro the best UK conveyancers.
