Steps for remortgaging to raise capital

At the start of your mortgage term, the bulk of your mortgage payments go towards interest, but over time this reduces and you pay more off the principal amount. You may find yourself in a position where you own a larger portion of the property or equity as it is sometimes known.

If you need a little extra money at any point, remortgaging to release equity is a great way to access funds. It’s often cheaper than credit card borrowing or personal loans. In this guide, we will provide an overview of a capital raising mortgage to help you understand your position.

Is a capital raising mortgage the best way to release equity?

If you’re thinking about extending your home or renovating, releasing equity from your home is a great way to raise the funds. This could be useful for a new kitchen, a loft conversion or an extension.

Once your current mortgage term comes to an end, you’ll have the opportunity to remortgage your property and secure a fixed interest rate. As part of this application, you can also apply to borrow more money by releasing equity from your home.

What should I consider before releasing equity?

Remortgaging and releasing equity is simple enough if you have come to the end of your fixed mortgage term. At the end of this period, lenders will switch you to their standard variable rate. Most lenders expect you to remortgage during this time to fix your mortgage payments for a defined period.

If you’re in the middle of a mortgage term, remortgaging to release equity will be more complicated. There may be early repayment fees to consider that could make the cost of borrowing additional money less worthwhile. In this instance, a personal loan might be more affordable. You could then wait until your mortgage term comes to an end, remortgage and repay your personal loan with released equity.

Working with a mortgage broker will help you to understand your position and make sure you choose the best option for your financial situation. Get in touch with Niche Mortgage Info today to find out more.

How to clear your mortgage in 5 years

Living mortgage-free is a dream that many people have. Once you get on the property ladder, your mortgage product may give you the option to pay it off faster than the agreed schedule. This can allow you to rid yourself of monthly mortgage payments and free up more of your income.

Once you are free from your mortgage, you’ll be entitled to 100% of the proceeds if you sell your home. If you decide to relocate or downsize, you won’t have to pay back the remaining portion of your mortgage when you sell. If your property has increased in value since purchasing it, you could be sitting on a healthy investment.

If you are on a fixed-price mortgage for 5 years, you might want to use this time to aggressively pay down the mortgage to help save money on interest. At the end of the fixed price period, you would have to remortgage the property or take your chances with the lender’s standard variable rate.

With a £150,000 mortgage at 5% over 25 years, paying off a lump sum of £5,000 will reduce your interest payments by £11,500 and allow you to finish paying your mortgage 18 months earlier.

There are clearly savings to be found with paying off your mortgage early, but this needs to be weighed up against the loss. Aggressively paying back your mortgage could mean you are paying less into investments or a pension scheme.

In this blog, we will look at some of the advantages and disadvantages of paying off your mortgage early. We’ll also look at practical steps you can take to repay your mortgage in just 5 years.

How long does the average person take to pay off their mortgage?

There is no average mortgage repayment term. Some people will take on a 15-year mortgage while others take on a 30-year mortgage. Many people will aim to have their mortgage paid off before retirement. If you remortgage at any point, you can expect this to extend the length of time it takes to repay your mortgage.

Paying off your mortgage in 5 years is not unusual, particularly for high earners. Some people make early repayments every month while others make additional payments when they have a lump sum to spare. Early repayment isn’t necessary and doesn’t always make sense. Some people like the predictability of their monthly repayments and knowing exactly how long it will take them to be debt-free.

Is there a disadvantage to paying off your mortgage early?

Paying off your mortgage in five years will help you to be free from mortgage debt forever. But at what cost? If you are putting all of your spare income towards paying off your mortgage, you might be unable to save, invest or put the money towards your pension.

The returns you could see from your property might not be as large as the returns you could see from investments. So before deciding if paying back your mortgage in 5 years is a good idea, think about what you will need to sacrifice to make this happen.

This is a simple cost-benefit analysis. Every choice you make about your money comes with a cost, and hopefully a benefit. Keeping it in a low-interest savings account will mean that you always have access to the money, but it won’t be working as hard as it could in a less accessible investment form. Likewise, paying off your mortgage early will give you some freedom in the future, but you have to think about what you are giving up when you focus on paying back your mortgage.

Paying back your mortgage in 5 years

If you decide that paying back your mortgage is a priority, these are the steps you will need to take. Always seek professional financial advice before making any big decisions. It might be popular at the moment to aggressively pay down debts, but it isn’t always the right option.

Pay down expensive debts first

There’s little sense in putting money towards mortgage repayments if you have more expensive debts to consider. Credit cards can have eye-watering interest rates that will be much higher than your mortgage. When it comes to paying back debts, it always makes sense to pay down the most expensive debts first.

While £2,500 in credit card debt at 18.9% APR might not seem like much, it would take 13 years and 10 months to clear the debt making payments of £40 per month. You would also pay £4,120.64 in interest. So before you put all extra money towards your mortgage, make sure you have paid back everything else with a higher interest rate.

Find out if early repayment is an option

The first step is to find out if your mortgage company will allow early repayment. Some will only allow you to repay a certain amount each year, and any additional early repayments will be subject to a fee. This is to cover any loss of interest the lender expected to receive. If the fee is higher than you stand to save in interest payments, it might not be worth overpaying above the allowed amount.

Find out when the interest is calculated

You need to make overpayments at the right time to increase the benefit. If your interest is calculated daily, then making a lump payment as soon as possible is better. But if the interest is calculated annually, then you need to time your overpayments so that it reduces the interest due. Speak to a mortgage broker if you aren’t sure how your interest is calculated. They can help you switch to a better lending product if yours isn’t working for you.

Determine what is left to pay

Before you work out your monthly repayments, you need to know how much is left to repay. Your mortgage provider should be able to tell you the sum to be repaid. Remember that early repayment should reduce the total amount you pay because you will pay less in interest. But this isn’t always the case if you have to pay early repayment penalties.

If the fees you will have to pay are higher than the interest you are saving, then it isn’t worth repaying your mortgage early. In this instance, you should look to refinance your mortgage with another lender. Look for a lender that doesn’t charge early repayment fees to get your plans back on track.

Work out what you can afford to pay each month

Budgeting is the best way to maximise your mortgage payments. You don’t want to stretch yourself so thin that you are unable to keep up with unexpected costs. If this happens, you could run into trouble if your circumstances change.

Look at your monthly income and outgoings and determine where you can boost your earnings and trim your expenses. Reducing your monthly food budget, getting rid of TV subscriptions and saying goodbye to your gym membership could fee up a lot of room in your budget.

At £40 a month, getting rid of an unused gym membership could allow you to put an extra £480 towards your mortgage per year. As a couple, this could increase to £960. Repeat this over a few monthly expenses and you could soon see the extra monthly income add up.

Alternate months

Plunging all of your money into repaying your mortgage isn’t always a clever move. While it might save you money on interest payments, you might be sacrificing your financial stability. If you run into trouble, plunging all of your income into a home means that the only way to access these funds is to sell.

A better alternative would be to split your extra money between savings and mortgage overpayments. This will help to bolster your emergency fund so that you aren’t left out in the cold if your situation changes.

Stay accountable

Tracking where every penny goes will help you to remain accountable. Using budgeting software or spreadsheets will allow you to keep on track with your savings and repayments. You’ll also be able to see the impact your overpayments have on your mortgage equity and the amount of interest you will pay over the lifetime of the mortgage.

When you know where every penny of your income goes, it’s easier to identify areas of waste and how you can direct more of your income towards paying off your mortgage.

Maximise your pension payments first

Paying additional income into your pension isn’t just great for your retirement plans, it also allows you to make the most of government and employer contributions. You can also get tax relief on your pension contributions, so you could save money on your tax bill.

Overpaying your mortgage isn’t always the best option, as you could be missing out on tax relief and employer contributions to your pension. Even something as simple as a LISA could be more beneficial in the long-term, as you will earn a maximum of £1,000 per year on £4,000 of savings.

Refinance if you aren’t disciplined

If you worry that you won’t be able to stick to your repayment plan, you could refinance your mortgage to a shorter term. This will increase your monthly payments and allow you to pay off your mortgage faster, without paying early repayment fees. You will need to meet the lender’s affordability checks and show that you can make the higher monthly repayments.

If you secured your mortgage with a low deposit, you might be in a better position once you have paid down the principal and increased your equity. This could allow you to secure a better interest rate with a shorter repayment term. Instead of repaying your mortgage over 30 years, you could reduce it to a 15-year mortgage and secure a lower interest rate.

Is there a better way to do this?

Making your usual monthly repayments and making smart investments could help you to pay back the mortgage sooner and without feeling the pinch. If your money could earn a higher rate of interest than you are paying on your mortgage, it might make more sense to save the money and then pay back your mortgage in a lump sum when you are ready.

Think about an offset or flexible mortgage

With an offset or flexible mortgage, you will have the option to draw back the money you have overpaid in the event you need it again. This is an excellent way to safeguard your finances, pay back your mortgage faster, but still access the money if you need it.

You don’t have to sell your home and you won’t be charged a fee. An offset mortgage is like an optional savings account. If you leave the money there, it’s paying off your mortgage, but you can always withdraw it if you need to.

What to do once your mortgage is repaid

If you are going to pay off your mortgage in one lump sum, you will need to request a mortgage satisfaction document from your lender. This will confirm that you have paid the remaining balance, any interest charges due and any early repayment fees.

You don’t have to do anything once your mortgage payments are complete. You can request a copy of your title deeds that will demonstrate you are the owner of the property and there is no mortgage on the property. If your home isn’t registered with the Land Registry, you will need to get it added. If you purchased your home after 1990, you shouldn’t need to worry about this.

It’s important to make sure you have good property insurance in place, as you will now be solely responsible for the property.

Once your mortgage payments are complete and you are free from debt, you might start to think about retirement or investing. Make sure you allocate your extra monthly income towards smart investments to make the most of your mortgage-free position.

If you need help understanding early repayment and how it can impact your finances, get in touch with Niche Mortgage Info today, we can help you to secure the right lending products that will enable you to realise your dream of living debt-free.

Is now a good time to remortgage for the last time?

Those thinking about getting on the property ladder will often question if now is a good time to remortgage, or if they should wait a little longer. After nine years of low base rates, borrowers were surprised to see rates drop even lower. In the summer of 2020, rates fell from 0.5% to 0.25%, a new all-time low.

Mortgage rates are determined by many factors, including the cost of borrowing, the risk of lending, and competition for customers. The Bank of England base rate is also a good indicator of the kind of rates you might be offered. So with rates at a current all-time low, is now a good time to remortgage?

Can mortgage rates go even lower?

Buying when property prices are low is not the only way to save money on property purchases. You can also take advantage of low rates and lock in low repayments, saving tens of thousands over the lifetime of a loan. If rates were to drop even further, this could fuel higher demand for property and increase property prices. And this isn’t necessarily a bad thing for prospective homeowners.

Since 2012, rates for mortgages have fallen significantly. On a 90-95% LTV mortgage, you could expect to pay around 6% in 2012, but this has now fallen to around 3%. On a 60% LTV mortgage, you may have paid around 4% in 2012 and would pay just 2% today.

For every £100,000 you borrow, at 6% interest with a 25-year team, your monthly cost would be around £650. At 3% interest, with the same term, your monthly payments would be closer to £478. This would save you over £2,000 per year.

Longer fixed terms

Another attractive prospect for borrowers is the possibility to “lock-in” repayments at low rates. We are seeing more lenders offering 10-year fixed-term mortgages with a 5-year break clause. If you are nearing retirement and want to take advantage of low rates, this is a great way to fix your repayments over the next ten years.

If you aren’t already on the property ladder, or you are considering remortgaging in the next 12 months, you could consider a long fixed term. Since many lenders will offer a break clause, this is essentially a five-year fixed-term deal with the option to extend if you are still enjoying a great deal. Choosing a lending product that allows overpayments could enable you to take advantage of the low repayments and clear your mortgage faster than ever before.

Next steps

If you’re considering remortgaging to a long fixed-term, it’s important to make sure you are getting the best possible deal. Our mortgage brokers can connect you with the best lenders for your situation. With access to all lenders, not just the high street names, you could enjoy significant savings over the lifetime of your mortgage.

Can I remortgage to buy another property?

Once you’ve started making progress on paying back your mortgage, you might start to wonder about the next steps. You could pay back your mortgage in full and then live mortgage-free for the rest of your life. Or you could think about purchasing a second property, either as a holiday home or a buy-to-let property.

Many people dream of owning a second home, and using your current home as leverage to secure the funding is a great way to achieve this. Read on to learn more about how you could remortgage your home to help fund a second mortgage.

What is remortgage for second property process?

When you purchased your first property, you likely had to save a hefty deposit. When it comes to securing your second property, you can consider using the equity in your current home to fund the deposit for the second home. Remortgaging is a popular way to achieve this. These are the things you’ll need to know before moving forward:

What is your current equity?

The closer you get to the end of your mortgage term, the more of the property you will own. With every repayment, you are increasing your equity in the home, which means if you decide to sell, you would walk away with a larger chunk of the whole value.

As the value of your equity increases, this opens up the possibility of remortgaging and releasing some equity. You could use these funds to improve your property, or as a deposit for a second property.

A mortgage broker can help you to determine if your money could be put to better use by using home equity to purchase a second property.

Would the remortgage be affordable?

Remortgaging is not something you should think about doing on a whim. You need to make sure the new mortgage would be affordable, and that adding an additional mortgage to your current outgoings won’t strain your finances. Failing to keep up with payments on this type of remortgage agreement could lead you to lose both properties.

Are you self-employed?

If you switched to self-employment recently, you may find it more difficult to secure a mortgage. Even if you already have a mortgage, lenders will look at your application with fresh eyes. The self-employed often need to meet strict criteria for lending, and this is the same for remortgages, too.

Lenders often find it more difficult to verify income for the self-employed. The self-employed are also more likely to have irregular income, which can make lenders nervous. If you have less than one year of accounts, you should consider working with a specialist mortgage broker to find a lender that is more likely to work with you.

Be wary of fees

Remortgaging will often come with fees attached, including arrangement fees and early repayment charges. Make sure you aren’t losing out on money by remortgaging. To learn more about remortgaging to finance a second property, explore our knowledge hub.

Is it better to overpay mortgage or reduce term?

If your financial situation changes over the course of your mortgage, you might find yourself with more disposable income at the end of the month than expected. The question of saving or spending is one that divides financial advisors, but there is another option to consider. Overpaying your mortgage can help you to clear the balance faster and reduce the amount you pay overall.

In this guide, we’ll break down the options available to you to overpay your mortgage, and how this can help you when the time comes to remortgage or purchase a second home.

What are the benefits of mortgage overpayments?

There are three main advantages to mortgage overpayments. These are:

  1. You will pay less interest
  2. You can lower the mortgage term
  3. You can save money in the long term

Mortgage overpayment quickly turns into significant savings. For example, paying an additional £100 per month on a £100,000 mortgage over 25 years with a 4% interest rate will reduce your mortgage term by 6 years and save you over £15,000 in interest.

Remember that some lenders charge you for early repayment, so make sure you factor this into your affordability calculations.

Is it better to overpay mortgage or reduce term?

If you're trying to decide between the option to overpay mortgage or reduce term, you might be surprised to learn that both will achieve the same outcome. The only difference will be that reducing the term will increase the minimum required payment every month. With overpayment, you have a choice to skip a month, reduce your overpayments or increase your overpayments. This keeps things flexible and allows you to take control of your finances.

If your situation changes or if you need a little extra cash one month, you’ll have the option to stop overpayments without consequence. For example, if you have a baby and need extra money to spare every month, you can stop your overpayments. But if you get a pay rise at work, you can add a little bit more to the mortgage pot every month. If you make changes to the mortgage term, you can change the structure of the mortgage and this offers less flexibility.

How to make overpayments

If you are interested in making additional payments every month, you will need to speak to your lender. You may have a limit to the amount you can overpay every month, or you may face fees to make overpayments. If you pay off your mortgage before the end of the fixed term, they could also be fees due. Always check with your lender to find out how to make over payments and how to ensure you don't face any fees.

If you aren’t sure if overpayments are right for you, or if you have a mortgage that doesn’t allow overpayment, get in touch with Niche Mortgage Info. We can help guide you to choose the right mortgage products for your needs. You may need to remortgage or do a product transfer to make it possible to overpay your mortgage.

How to get out of 5 year fixed mortgage

Leaving a fixed term mortgage early is certainly possible, but not always advisable. When you sign up for a fixed rate mortgage, you’re agreeing to the term, and exiting early can lead to some hefty fines. If the cost outweighs the potential savings, you could be better waiting out the end of your agreement.

These fines are simply early repayment charges, and they are likely to be payable on any mortgage, but always check the fine print. If you think you can get a better deal elsewhere, or if you want to repay your mortgage early, read on to learn how to get out of a 5-year fixed mortgage.

What is a fixed rate mortgage?

A fixed rate mortgage gives you some stability for the agreed term. A standard variable mortgage will mean that the interest rate is set by your bank, and heavily influenced by the Bank of England Base Rate. With a fixed rate mortgage, you’ll know exactly what your mortgage interest rate will be for the lifetime of the mortgage agreement.

This can work to your advantage, particularly if interest rates rise. When interest rates increase, those on variable rate mortgages will see their monthly repayments go up. A fixed rate mortgage protects you from price increases. However, if interest rates fall, you won’t be able to take advantage of lower monthly repayments.

Some people prefer fixed rate mortgages because it gives them some stability. They know exactly what they will pay every month. But with a fixed rate mortgage comes a fixed term. This means that you agree to keep the mortgage product for an agreed term. 2-year and 5-year fixed term mortgages are the most common.

Can you break a fixed term mortgage contract?

You can get out of a fixed term mortgage contract, but this will come with a fee attached. If you want to sell your home or remortgage to get a better rate, you will essentially be paying back your mortgage early.

Nearly all mortgages will have an early repayment fee attached. The early repayment fee covers the lost interest payments that banks suffer when borrowers repay their mortgage early. So you can get out of a fixed term mortgage, but you can expect to pay an early repayment fee so it’s important to understand the costs.

With a £200,000 mortgage remaining, you could face an early repayment charge of up to £10,000. This could wipe out any potential savings, so it’s important to consider the full cost of leaving your agreement early.

How much does it cost to break a fixed mortgage?

The early repayment fee will vary depending on the lender and the type of mortgage. The fee is typically a percentage of the remaining balance of the mortgage, usually around 1-5%.

If this amount of more that you could save by switching to another product, you might be better staying put. If you need to move house, you might have to accept that an early repayment fee is unavoidable. Always check the fine print, as a small number of lenders don’t have early repayment charges, so you would be able to leave your agreement without consequence.

What happens if I leave a fixed rate mortgage early?

The only consequence of leaving a fixed rate mortgage early is that you will need to pay the early repayment charges. You won’t damage your credit score or face any negative consequences from your lender or future lenders.

You must weigh up the full cost of leaving your fixed rate mortgage early, particularly if you are remortgaging. You may face early repayment fees on top of arrangement fees for your new mortgage. Unless you are switching to a much better mortgage deal, you might be better staying put until the end of your agreement.

At the end of your fixed rate mortgage agreement, you will very likely be moved to your lender’s standard variable rate. You will then be free to remortgage, sell the property or increase your monthly payments to pay off the mortgage sooner.

Can you sell a house with a fixed mortgage?

Yes, it is possible to sell a property with a fixed rate mortgage in place, but it will come with a cost. Once the home sells, the early repayment charge will be deducted from the proceeds of the sale.

You don’t need to let the buyer know that you are on a fixed price mortgage, but if you are thinking about purchasing another property, you might need to consider what you can afford once you factor in the cost of paying the ERC.

If you’re shopping around for a better deal, we can put you in contact with the brokers who can help secure the best possible deal. We’ll help you calculate your early repayment charges and determine if getting out of your fixed term mortgage early will be beneficial.

Remortgage to clear a Help to Buy Equity Loan

The Help To Buy Equity Loan scheme launched in April 2013. This Help to Buy scheme was intended to make it easier for those with a smaller deposit to get on the property ladder. For those people who took out this type of loan at the start of the scheme, you may have found that the interest-free period has now come to an end. So what should you do next?

You may find that your financial position is a lot different to when you first took out the loan. This leaves you with a few options to consider as you move forward. In this guide, we will explore the options available to you once your interest-free period comes to an end.

What is the Help to Buy Equity Loan Scheme?

This government-backed scheme was designed to help first-time buyers on the property ladder with a smaller deposit. It was only available on New Build properties in England and Wales worth up to £600,000 in England and £300,000 in Wales. The scheme was supposed to end in April 2021 but has been extended until March 2023.

The new Help to Buy Equity Loan scheme opened to applications in December 2020. Once this scheme took effect, the old scheme was no longer available.

The scheme works by offering borrowers an interest-free loan to help them buy a property. The full property value is secured in three parts:

  1. The borrower contributes a minimum 5% deposit.
  2. The government lends up to 20% of the property value, and 40% when buying a property in London. This loan is interest-free for the first 5 years.
  3. The remaining 75% of the property value is secured through a mortgage, usually on a 2 or 5 year fixed deal.

This is clearly an attractive prospect for borrowers who might struggle to secure a 25% deposit through savings alone. It allows borrowers to shop around for the best mortgage deal and save money on fees and interest rates.

What happens after 5 years?

Once your interest-free repayment period comes to an end, you will have to start paying interest on the remaining loan amount. This is on top of your mortgage repayments, so you could see your monthly repayments increase by quite a bit.

  • From year 6 onwards, you will pay 1.75% on the remaining loan
  • The interest rate will go up every year at the RPI (retail price index) plus 1% until you have repaid the full amount.

How Do You Pay Back Help To Buy Equity Loan?

Clearing the loan in the first five years is obviously the best way to avoid any additional charges, but this isn’t always that simple. Remember that the loan repayment is on top of your mortgage repayments, so you might struggle to clear the full loan amount in 5 years.

You have to pay back the loan in full either when you sell the property, or when your mortgage period comes to an end. If you sell your home, the government simply takes a percentage of the sale price. If your home has increased in value since you purchased it, you could end up paying back a lot more than you borrowed.

Can you remortgage out of an Equity Loan?

If you are in a stable financial position, you could consider remortgaging and clearing the equity loan. There are two options you can consider if you are nearing the end of your fixed term deal.

  1. You could remortgage and keep the equity loan. You will continue making repayments as usual.
  2. You could remortgage to pay off Help to Buy loan. This will incur an admin fee of £115.

The second option will leave you with a larger mortgage, so you need to consider if you can afford the bigger monthly payments. A mortgage broker can help you to determine if this is the right move. Make sure you stress test your finances to determine if you can afford the repayments and avoid defaulting.

Benefits of paying off the equity loan

If you want to keep the same property, you might want to consider raising the funds to pay off the Equity Loan. At the very least, start paying off the interest. Paying it off in full will help you to avoid interest charges, but this isn’t always an option unless you have the funds available.

If you cannot afford to pay off the loan, the government will continue to own a percentage of your property. This means that if you sell your home, the government will not simply repay what is owed, they take a percentage of the property sale. This could mean you lose out if house prices have increased.

Move house to pay off the loan

If you are thinking about moving house, another option would be to move house and pay off the loan in full. If the value of your property has increased, you could move to a less expensive area and have enough for a larger deposit. This would free you from interest charges and allow you to start fresh.

Is it worth paying off the Help to Buy Equity Loan?

This always depends on your personal circumstances and what you can afford. While the 5-year interest-free period might sound tempting, paying back what you can during this time is advisable. This will reduce the amount of interest you pay in the long term. There are a few key benefits to paying back your Equity Loan in full.

  1. If the property increases in value, you get to keep all of the profit. With an Equity Loan, the government owns a percentage of your property, so you might pay back more than you borrowed.
  2. You don’t have to worry about the interest charges piling up when the interest-free period comes to an end.
  3. When you come to remortgage your property, you will own a larger percentage of your home, giving you access to more lenders. This will allow you to shop around for the best possible deal.

If you do decide to remortgage, remember that this may come with additional charges. Lenders will typically have early repayment fees that are applied when you change mortgage products.

A guide to extending your home by remortgaging

Need to Remortgage To Extend House?

Homeowners, read on. Perhaps you start thinking about having a little more space, a more modern kitchen, or a luxury bathroom. Rather than go through the stress and upheaval of moving house, you could consider extending your current home to make it more suitable for your needs.

Converting a garage into a living space could make room for a home gym, and extending your home with a conservatory could give you extra living space to enjoy. Loft conversions, basement conversions and extensions to the front, back and side are all options to consider.

In this guide, we will look at how you can extend your current home to avoid having to move house. We’ll look at how to raise the funds, securing permissions, keeping within the relevant building regulations and finding a builder and/or architect.

Getting permission for your extension

Getting permission for your extension

Before you make any plans, you need to find out if your proposed changes are allowed. Planning permission is secured by the local council and ensures that changes to homes do not impact other properties around it.

You may be able to work around these guidelines by making small adjustments to your property. This type of change is known as a permitted development and does not require planning permission.

You don’t need planning permission if:

  • The extension isn’t higher than the highest part of your existing roof
  • The extension does not extend more than 3m from the original wall of the house, for a single-storey rear extension on a semi-detached or terraced house.
  • The extension does not extend more than 4m from the original wall of the house, for a single-storey rear extension on a detached house.
  • The extension does not extend more than 3m from the original wall of the house, for a double or more storey extension.
  • The extension is not more than 4m high for a single-storey rear extension.
  • The extension should not be more than half the width of the original house for a single-storey side extension.
  • The extension should be at least 7m from the rear boundary for a two-storey extension.
  • The materials used should match or be similar to the appearance of the house.
  • You cannot include a balcony or raised platform.

You may need to create a party wall agreement with close neighbours, as the work may affect them. And if you are planning to extend a new-build house, you’ll need permission from the developer, and they often charge a fee for this.

Planning permission and building regulations

Planning permission and building regulations

If your ambitions sit outside of these dimensions, then you will need to seek planning permission for your development. You can explore the interactive house tool from the Planning Portal to help you decide if you need to seek permission for the changes to your home.

If you live in a conservation area, you may be subject to more restrictions on what you can do with your property. Even if your changes don’t require planning permission, you might still need to observe building regulations. This will ensure that your extension and adjustments are carried out correctly. Building regulations help to protect you from subpar work standards.

How much does a house extension cost?

How much does a house extension cost?

This is determined by a number of factors, and there are steps you can take to keep costs down. As a general rule of thumb, you can expect to pay around £1,000 per square meter of single-storey extension. Extending your property with a 3x5m extension would cost around £15,000 for a single-storey, and significantly more for a two-storey extension.

Choosing premium finishes and working with an architect, builder and project manager will all add to the final cost. By choosing quality but cost-effective materials, and by project managing the build yourself, you could save a lot of money. And if you can find a builder with a talent for design, you can often save money here.

Finding an architect or builder for your project

Finding an architect or builder for your project

Choosing the right architect and/or builder for your project will help to keep everything compliant and under control. You should look for someone skilled, experienced and trustworthy to complete the work. Choosing based on the cheapest quote isn’t always the best strategy, particularly when you are talking about structural changes to your home.

If you decide to work with an architect, look for someone who can understand and respond to your needs. They need to be able to take your requirements and create something that ticks all of the boxes. If they are only interested in their own vision, you might be sorely disappointed with the results.

Many architects have relationships with local builders and will be able to advise on someone who will be able to bring their vision to life. Remember you don’t have to choose the builder your architect recommends, but it can help to make the work run smoothly.

If you decide to only work with a builder, you will need to find one who also offers design services. This is a great way to keep costs down, but the end result might not be as inspiring as you might like. Don’t be nervous about asking multiple builders and architects for quotes; this is all part of the business and they won’t be offended if you don’t choose them.

How to fund your extension

Remortgage To Extend House

Most people fund home extensions in one of two ways. You can either take out a loan for the extension or remortgage your property and release some equity. Using a mortgage for extension purposes is very common, but lenders may want to know your plans before they grant the additional funds.

With the first option, you might face higher interest rates, but you may be able to pay off the loan quickly by remortgaging the property once the extension is completed. You will pay for the building work from the loan, and then have your home valued with the extension in place. This figure will then be used to remortgage, and you can pay off the loan by releasing the additional equity from your home.

The other method is to remortgage your property and release equity and extend your mortgage term to keep your payments the same. As interest rates are so low at the moment, you could secure a great deal by switching your mortgage to a fixed-term rate. This will keep your mortgage payments predictable for the lifetime of the term. Once the term is up, you can remortgage again, using the new higher property value to secure a great deal.

If you need help remortgaging to pay for your home extension, speak to our team today. We can put you in touch with the ideal lenders for your circumstances.

Remortgage or product transfer? Which is right for me?

It’s common to feel confused by mortgage jargon. Not everyone is an expert in this highly specialised field, and most of the time you don’t need to be. You only need to know how to determine if a deal is right for you.

If your fixed term mortgage is coming to an end and you are wondering about the next steps, we can help to demystify the options available to you. If you’re considering a mortgage product transfer and want to know the next steps, read on to learn how we can help.

What is remortgaging?

Remortgaging is when you take out another mortgage on a property you already own and use this to repay your existing mortgage. You can move to a new lender, or stay with the same lender. This can allow you to switch lenders or products, or it can allow you to free up equity from your home.

Why would I need to remortgage my home?

Remortgaging is common when you come to the end of a fixed-term mortgage. Many fixed-term mortgages will last 2, 3 or 5 years. At the end of this period, lenders will switch your mortgage to a variable rate, which can mean that your monthly payments increase or decrease with interest rates. Remortgaging will help to fix your repayments again and offer some stability.

Remortgaging is also popular if you want to release some equity in your home. Rather than moving house, you could consider developing your home by releasing equity to pay for the renovations.

If you aren’t interested in releasing equity from your home and simply want to change your lending product, a product transfer might be more appropriate. This could save you a lot of time and money.

Advantages of remortgaging your property

  • With more equity in your home, this will reduce the LTV, which means you will have more choice when it comes to lenders and mortgage products. This could mean you secure a better deal on your mortgage with lower interest rates.
  • If you have been moved to your lender’s standard variable rate, remortgaging will help to bring some stability and predictability to your monthly payments.
  • You could release funds from your home to pay for renovations. This can be a better way to fund renovations, as you will secure a lower interest rate than you could secure with a personal loan. If the renovations increase the value of the property, this will make life easier if you sell or remortgage again in future.

Things to consider before remortgaging

Remortgaging requires a complete mortgage application, so anyone named on the mortgage will need to go through the process again. If there have been significant changes to your income, such as moving to part-time work, switching to self-employment or retiring, this can impact your ability to secure a mortgage.

You will need to show evidence of income, which can be more complicated if you are self-employed or retired. You can read more about the self-employed remortgage application process here.

You will need to secure a valuation for the mortgage application, which may be an additional expense. Some lenders will charge you for this, but others include this in their lending product.

You will need to pay a solicitor or conveyancer to ensure that the remortgage documents are processed correctly. Since you already own the property, you are simply transferring ownership from yourself to yourself, but you need to make sure this process is done correctly. Mistakes on your Title Deed can cost a lot of money to fix in the future.

These additional fees may be rolled into your remortgage product, but bear in mind that you’ll be paying interest on these additional amounts. This could add up over the years, so make sure the benefits outweigh the costs.

What Is A Mortgage Product Transfer and how is this different?

A product transfer can allow you to achieve the same thing, but it is a lot less complicated to arrange. If you are happy staying with the same lender and don’t want to access any additional funding, then a product transfer might be a better option.

Like switching your electricity to a new tariff without changing suppliers, a product transfer works in a similar way. You can transfer the remainder of your mortgage to a new product, usually with a lower rate This is less complicated than remortgaging and is typically very quick to arrange.

Advantages of product transfers

  • The application process is streamlined and simplified, and you won’t need to pass the financial checks as you would with a full remortgage. The application can usually be completed over the phone, and the entire process may be completed in as little as 10 days.
  • You don’t have to complete the same amount of paperwork as with a full remortgage.
  • You don’t have to have your property valued when applying for a product transfer. This means you don’t need a solicitor or conveyancer, which reduces the costs.

Things to consider before a product transfer

This option doesn’t allow you to release any equity from your home. You are simply moving your existing mortgage balance from one product to another.

You have to stay with your current lender, as mortgage transfers between lenders are not possible. This could mean you aren’t getting the best deal available, but if speed and ease of transfer are more important to you, this might be worthwhile.

You won’t be able to make any changes to the applicants, so if you’re hoping to add or remove a partner from your mortgage, this isn’t the right choice for you. Adding or removing someone from your mortgage requires you to remortgage and go through the appropriate legal steps.

Remember that any remortgage or product transfer may incur an early repayment fee, so consider this before moving forward as this can remove any potential savings.

If you’re thinking about remortgaging or securing a product transfer, we can help connect you with the right lenders.

When Should I Start Looking To Remortgage?

When Should I Start Looking To Remortgage?

With interest rates at an all-time low, you might be wondering if you could get a better deal on your mortgage. The Bank of England base rate fell from 0.25% to 0.1%, so now could be a great time to remortgage to save money.

Many people wonder, should I remortgage or should I stay put with my current deal? There are advantages and disadvantages to both approaches, so let’s explore the topic in more detail.

These are some of the most common reasons you might consider remortgaging your property:

  • To secure a better rate
  • To avoid a standard variable rate
  • To move from interest-only to repayment
  • To be able to make overpayments
  • To borrow more money

Every situation is different and will need careful consideration. Since remortgaging carries a similar amount of paperwork as your original mortgage application, it isn’t a decision to be taken lightly. If you simply want to change your lending product and stay with the same lender, a product transfer might be more appropriate.

Your budget and needs might change over the lifetime of your mortgage. It’s rare to stay on the same mortgage for the full term, and shopping around for a better deal is very common.

When Should I Start Remortgage Process?

There are so many reasons to consider remortgaging, from releasing equity from your home to changing your monthly payments. These are some of the most common reasons we see customers looking for remortgage support:

Looking for a better rate

When interest rates fall, lenders often respond by offering mortgages with lower rates. These aren’t only available to new customers looking for a new mortgage, you could move your mortgage to a new lender and make the most of these offers. If you’re still in the middle of a fixed-term mortgage, you may have early repayment charges, so bear this in mind when you are calculating the potential savings. See these comparisons.

Your fixed-rate deal has come to an end

It’s common to sign up for a fixed-rate mortgage for 2, 3 or even 5 years. This helps to guarantee your mortgage payments every month to make it easier to budget. Once this term comes to an end, it makes sense to consider your options and see if you can find a better deal. At the end of your term, your lender will switch you on to a standard variable rate, which can go up or down every month. If you want the same mortgage payments every month, you should remortgage to a fixed-term deal.

You want to move to a repayment mortgage

If you decide you want to switch from an interest-only to a repayment mortgage, you may need to remortgage. This type of product change can often be handled as a product transfer if you stay with the same lender, but you can also shop around to try to find a better deal.

You want to make overpayments

Some lenders don’t allow overpayments, so you may need to switch if you find yourself in a position to make additional payments on your mortgage. Overpayments will help you to clear the balance earlier, and this will reduce the amount of interest you pay. Since this changes your interest liability, there may be an early repayment charge, but switching to a different mortgage can remove this.

You want to borrow more money

When you have built up equity in your home and the home increases in value, you can remortgage to borrow more money by remortgaging. Rather than move home and take on a new mortgage, you could stay put and make changes to your existing property to make it more suitable for your needs.

Releasing equity from your home could also be useful if you need to buy a partner out of your mortgage, if you need to pay off a large debt, or if you simply want to release some of the funds.

Remortgaging and borrowing more money will either increase the time it takes to repay your mortgage or make your monthly repayments higher. This method can also increase the amount of interest you pay. However, this method can be more effective than taking out a personal loan.

Bear in mind that the lender will want to know what you are using the money for, so be prepared for some additional questions.

Will I pay more if I remortgage?

This depends on the type of mortgage you switch to, if you are planning to increase your repayment term, and if you are planning to borrow more money. There are also costs associated with remortgaging that you need to take into consideration.

As you near the end of your mortgage term, your remortgage will require a much lower LTV, which can mean you can take advantage of the best rates available. By weighing up the cost of switching over the benefits of saving on interest payments, you could secure a great deal by remortgaging at the right time.

Do I have to remortgage?

You don’t have to move your mortgage if you don’t want to. If your finances are fairly secure, you could move to a standard variable rate and take advantage of the lower interest rates. Just remember that interest rates could go up at any time, and this could leave you with much higher payments.

Another option available to you is a product transfer. This will allow you to switch products with the same lender and avoid a lot of paperwork. Product transfers are ideal if you can find a good deal with the same lender, as they can be completed over the phone and finalised in as little as four weeks.

Need help navigating your remortgage? Get in touch with our remortgage team today. We can help you find the best possible deal, no matter your situation.