Mr Andrews contacted us looking to remortgage his residential property which is a 3 Bedroom townhouse in Nottingham with a current estimated value of £140,000 (October 2016).
During his remortgage review, we could see that he has a mortgage of £78,000 with Natwest and has been on the standard variable rate (SVR) for a number of years since his 2 year fixed rate finished.
Mr Andrews did not realise that his payments were much higher now that he is on the Standard Variable Rate. What has prompted him for a remortgage review is that he would like to make some home improvements to a log cabin he owns in Lincolnshire by fitting solar panels.
He approached his existing lender and whilst they would be prepared to lend him the money the terms were not attractive and his monthly payments would be higher than if he switched to a different lender. His best option is to switch lenders and take advantage of a remortgage fees free deal which includes a free valuation and legal costs paid for by the new mortgage lender. As he already owns the property the whole process was swift.
We spoke to Mr Andrews and advised him how much he could borrow against the property based on the value of the property, his income, affordability, planned retirement age and current financial liabilities which is a car loan and credit card. Additionally, now that Mr Andrews property has gone up in value he can choose a lower rate (available with most lenders) as his loan to value (LTV) will be less than 60% if he borrows £6,000 or less when taking out a remortgage. Mr Andrews was quite happy to take less than £6,000 for his energy management project. He also wanted to pay off his credit card.
Mr Andrews also confirmed that he has always kept up his repayments on his mortgage, loan and credit card and has never missed a payment.
As “whole of market” mortgage advisers we were able to advise Mr Andrews whether he can remortgage his property to raise additional finance and find a lender who will offer the most suitable mortgage for his needs with the lowest rates.
Mr Andrews was keen to have a 2-year tracker rate which tracks the bank of England base rate for a 2-year period before reverting to the standard variable rate. The security of a fixed rate was less attractive as the rate is higher as well as the product fee and early redemption charge. He was not on the brink of his higher affordability level so the tracker rate was favoured over the fixed rate. The ability to make over payments was also an attractive option as he wanted to pay off the extra capital.
His mortgage term stayed the same as did his repayment method so that his mortgage would be paid on his planned retirement date.
Once we decided which lender would be most suitable we arranged the remortgage and case managed the mortgage making sure that the valuation was done, mortgage offer arrived, legal services were instructed through to completion of the remortgage. It was all done quite quickly.
Now that Mr Andrews is a client we will be sending a reminder when his 2-year tracker rate is due to expire so that he can avoid paying the standard variable rate. We can provide a financial review and advise whether it is best to switch lenders on a remortgage or stay with his existing mortgage lender.
Additionally, we reviewed his insurance policies and discovered we could get Mr Andrews a better buildings and contents insurance policy for a lower monthly premium and also found better terms for his life insurance and critical illness cover.
Please read here if you want some general information about remortgaging.
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