When trying to make your dream home a reality, there’s no better way to get there than with a mortgage.
A mortgage is a loan you take to buy a house or other property. It’s an interest-bearing loan that allows you to repay the debt over time.
A mortgage is a lifesaver. It allows you to buy any property—no matter how expensive—provided you have a good credit rating. But what about a remortgage? Here is everything you need to know about this type of property loan.
Can you buy another property with a remortgage?
Yes, you can.
If you have the right amount of money saved, you can remortgage your current property and use the mortgage money to buy another one.
However, there are a few things you need to consider before remortgaging to purchase a new house.
Also read: Conveyancing Help For First Time Buyers
When is remortgaging a good idea?
There are several good reasons to remortgage if you’re looking to buy another property.
Remortgaging is ideal for buying another house for:
- Letting to buy: Here, you allow tenants to rent your home for a certain period. After that period, they will be the owners of the property.
- Buy to rent: You purchase a property for renting to people. You will reserve the freehold of the property forever.
- Commercial purposes: Here, the property you are purchasing will be used by your company as office space, industrial center, and so forth.
- Holiday or second house: Here, you will buy another home that you will use for holidays or a second home on top of the current one.
Also read: L&G Mortgage Club Warns 10 Days Left to Beat Stamp Duty Deadline
How to apply for a remortgage?
Here is how to apply for a remortgage to buy another house:
1- Get in touch with a financial adviser
They will help you make the right decision and also help you consider all your options for remortgaging your home. They will look at rates and conditions, so it’s best to speak to one well-versed in this area and advise on how to get the best deal from a lender.
2- Speak to a mortgage broker and make an application
If you’re thinking about getting a remortgage, the second thing you should do is contact a mortgage broker.
A good mortgage broker can help you find the best option for your situation and answer all your questions. They can also advise on how to manage your repayments and make sure that you make the most of your money.
Once you’ve spoken with a broker, it’s time to get down to business! You’ll need to fill out an application form, provide proof of income and assets and arrange for an independent valuation of your new home.
3- Use another income
If you’ve been looking for a new mortgage but struggling to find the right lender, you might be wondering how to get around the problem of not having enough money in your bank account. Well, you can get a second job.
With another income, applying for a new mortgage will be easier.
4. Go through the underwriting stage
If you’re remortgaging your home and taking out a new mortgage loan, you’ll need to undergo the underwriting stage. This means you’ll have to prove that you can afford to repay your mortgage and that you won’t default on it.
The steps involved in going through the underwriting process are:
- You’ll need to gather information about your income and expenses and proof of any savings or investments you have.
- You’ll need to fill out forms that ask for personal details about yourself and your finances, such as whether or not you own a house (or rent) or how much debt you have already accumulated.
- You’ll need to show that you can afford the repayments of both your old and new mortgages. This means providing evidence of your ability to pay off any outstanding debts and showing how much money is left over after paying all monthly bills (including housing costs).
- Once all of this has been done, an assessor will make an assessment who will decide whether or not they believe that you can handle the repayments on both mortgages without defaulting on them.
Also read: Which? claim most mortgage holders don’t know their interest rate
Conclusion
You must know what you’re getting into if you’re considering remortgaging your home to buy a new one.
It’s essential that you first get a professional financial adviser. It’s also worth talking to a mortgage broker to see if remortgaging makes sense for you and your family.
Conveyancers are another option to consider when you’re looking at remortgaging your home, as they can help with the legal side.
Also read: Mortgage Lenders Return with New Deals
