People underestimate the importance of REMORTGAGES when being homeowner

Hopefully this may be useful for someone

To begin, let’s say Emmanuel has a 360K mortgage with HSBC at 1.79% for 35 years on a house that’s worth 400K. He’s currently paying £1,154 per month

SCENARIO 1 - Simple remortgage

2 years pass
House Value - 405k
Mortgage Outstanding - £344k

Emmanuel’s Loan to Value is now 85% so he can access lower rates such as this one with Natwest making his monthly payments £1,127 now

He kept his mortgage term at 33yrs

SCENARIO 2 - Keeping payments the same but reducing term

2 years pass
House Value - 406k
Mortgage Outstanding - £323k
LTV 80%

Emmanuel is comfy with his monthly payments so will keep them similar and knock an ADDITIONAL 2 yrs off his now 31 yr mortgage

Now only 29 years left

SCENARIO 3 - Extending the Term

2years pass
House Value - 394K
Mortgage Outstanding - 305K
80% LTV

House prices have fallen meaning LTV has stayed consistent, emannuel is also expecting his first child, he adds 4 years onto his now 27 year mortgage to make payments manageable

QUICK RECAP SO FAR

Emmanuel currently has a 305K mortgage for 31 years with Post office paying £1,053

We go again

SCENARIO 4 - Paying off a lump sum

2years pass
House Value - 402k
Mortgage Outstanding - 280k
70% LTV

Emmanuel received an inheritance and wants to pay 50k off his mortgage making the mortgage now 230k and LTV 60%. He will keep his term consistent at 29 yrs

SCENARIO 5 - Reducing term to meet a goal

2years pass
House Value - 416k
Mortgage Outstanding - 208k
50% LTV

Emmanuel decided he wants to pay his mortgage off in 10 years and will remortgage to whatever deal will allow him to do so

10 years now remaining

SCENARIO 6 - Borrowing more and increasing term simultaneously

2 years pass
House value - 416k
Mortgage outstanding - 168k

Emmanuel decides to invest in a BTL property and needs 75k. He will borrow more with a new lender but select a longer term of 15yrs to keep payments down

LOAN TO VALUES EXPLAINED https://twitter.com/brickzwithtipz/status/1219584682335010816?s=21 https://twitter.com/BrickzwithTipz/status/1219584682335010816

It’s also important to note that each remortgages arent always a given

Its another mortgage application that will be assessed in a similar way as a first time buyers considering equity rather than deposit but still assessing credit scores and affordability

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