You have read about everything under the sun about mortgages and the reasons why things are the way they are. The banks are to blame because they didn’t have the forethought to realise that high interest rates combined with balloon payments would mean big trouble for the little guy. They didn’t take the time to study the employment trends and when they did crash didn’t bother to do anything about it. There came a time shortly after when the balloon payments were becoming due and people just could not afford to pay them back. This wound up being a good thing for those seeking to remortgage because the lending companies were needing to increase a customer base.
Under many circumstances you need a provable source of income in order to remortgage. Being self employed can cause several issues to arise with the lending institutions and they may have a different process to go through when applying. Being self employed affords you the ability of basically claiming what you want to for tax and insurance purposes but this can also hurt you when you are looking to remortgage your loan with another lender (or attempting to do so with your current lender). This is where self-certification comes in to play.
Nearly a decade ago self-certification was created so that those that opted for self-employment could state their earnings and to certify them. This is an important step to being able to remortgage as you will be showing your income. The commercial sector has the same thing these days and exists for:
*Sole Proprietor
*Limited Company
*Partnership
In the private sector many of the mortgage brokers and bank lenders are of the mindset that each individual person should be judged; accepted or denied on their own merit. These days the bankers are fully aware that we do not live in the utopia that we would have hoped we would. The world certainly is not perfect. Balloon payments, high interest rates and subsequently high monthly payments combined with other lingering bills and those unforeseen ones it is even harder today. Life is never easy and times of hardship and turmoil are inevitable. The same especially applies to small businesses.
When you own your own business you are not just responsible for your own hide but for everyone that works for you. Your business has to remain above water and functioning in despite of all of the financial hardships of the outside world. Regardless of all of those issues your business will be suffering and if you own property and are considered to be one of the general public then you could be in trouble as well. You have our own bills to pay on top of those of your business.
As an individual you may be suffering alongside everyone else but your business has to operate as its own thing. Thankfully lending institutions seem to appreciate their business customers more than their individual customers. They realise in order for society to function there needs to be a strong business model that can expand despite the financial woes. These strong connections between lenders and businesses have created a product where up to 95% (not less than 85%) of the property value can be loaned without proof of equity.
The Limits of Self-Certification
As a business you need to protect your assets and one way is to self-certify your earnings. This way you are able to prove how much you make from your business. This is important to lenders because they can then decide how much you can afford, what interest rates to charge and your type of loan. The down side here is that they expect you to borrow a lot of money. They will typically provide 75% to the loan value but what this transfers to is a considerable deposit. In rare circumstances a lender may allow a self-employed customer the ability to borrow from 85% to 95% if they have a self-certification of income and this is based on the current commercial mortgage numbers and your broker. It is their job to find you the cheapest loan product that fits your needs and flexible enough for you to breathe just in case of bad times.
Looking for the Best Remortgage Value
Being able to find the correct mortgage for your needs is an incredibly important decision for your financial well-being. There is no doubt in my mind, as a business owner myself, and in your mind as someone who is in the same situation as I was, that the survival of the business is paramount. Looking for a lender is like browsing the supermarket aisles for the products that have coupons by their shelves. Even if you are saving just a small amount of money you are still saving money. I will look for products where I barely save 1p or 2p – it’s just how I continually save funds because over time it does add up.
From a very early age we were always told by our parents to finish the food on our plate because they worked hard to provide for you. When we are young we really don’t see it from their point of view because we are kids, supply demand and waste of supply just does not factor in to our young minds. When we get older this changes quite rapidly. We realize that we buy food, we cook it and then we consume it. What we don’t eat is thrown away and that is money lost. As a business we can live and die on the amount of waste that we produce.
Inflation is one of the few constants that we can count on. The cost of petrol and every day housing goods serve as testament to this fact. A decade ago we would have never figured that a loaf of bread would reach £1! It is crazy to think what another decade would do – are we going to be paying £10 a loaf!? Think of UK property as a loaf of bread. Inflation hits the housing market just like it hits others. The average first time buyer home mortgage is currently hovering around the £100,000 mark.
The old saying is that a man’s home is his castle but when you own a small home you don’t want the rates of owning an actual castle! It is bad enough that we are at the £160,000 average property value. What this means for us is that remortgaging now can save us a lot of money later on getting a variable and open rate so that we can review and remortgage without much penalty.
Remortgaging in the UK
If you let emotions get in the way of what needs to be done you will find yourself in a world of hurt. It is hard to remove yourself from a situation in order to make the best decision possible. You need to look at the financial situation as it is: math. It is all about the numbers game and you just need to learn how to play it. Assume you have a mortgage in the £100,000 range and you will save roughly 2% on that number. That means you will have £2,000 savings over a years time. This of course assumes that you can make that percentage and savings each year. You can try to make this savings boon happen for you by shuffling through other lenders and constantly remortgaging when the situation improves in your favor.
What I mean by beneficial is that assuming you get a £2,000 savings a year you could move it to someone else and possibly net a savings of £50,000 a year! That is an astonishing savings over the average of a 25 year mortgage. Why continue lining the pockets of bankers and fat cats when you can take the extra droppings for yourself?
Hard Times are Common
We have all experienced some kind of hard financial times. This is the most common stresser we all share in life. While the big wigs and fat cats sit high upon their ivory towers us little guys, like Oliver with hand outstretched, beg and ask; “Can I have some more, please?” and it falls on deaf ears. Letters from our lenders are as common in the post as catalogs. They enjoy letting us know how much we owe them because a cheque we wrote a month ago did not have enough currency behind it so now we are being asked for a £27 fee. Do not worry because that will be increasing several more times as lenders like to constantly try to put the cheque in to be cashed so it will bounce a few times before they decide to stop or we deposit enough money to cover the cheque and all of the overages.
The lender deserves to be taken to the boxing ring more often. We can do this by remortgaging our current rates. We need to get money out of our property in the form of equity instead of constantly giving them the money. It is our right to get money from our homes instead of the bank getting it. Remortgaging offers us that solution by giving us some savings. It makes one wonder why remortgaging does not occur often? We are, in hindsight, lucky that it does not or else the terms would not be as good as they currently are.
The most basic reason for remortgaging Is to help yourself out with tough bills that are piling up and freeing up some money. But what can you use this money for other than bills?
What You Can Accomplish With a Remortgage
Life unfortunately walks hand in hand with debt. When you are born you are immediately saddled with debt and a credit rating. Over your lifespan you can rack up unfortunate large sums. Owning your own home along with all of the upkeep and taxes that go with it, buying and maintaining a car or attempting to pay back student loans are all debts. Remortgaging can give you the cash you need in order to refinance these numbers to make them lower or to pay them off completely. Besides remortgaging for the usual home reasons you can remortgage for a myriad of other purposes including:
*Money to go to starting a new career. Over time we become annoyed with our present job and just can’t deal with it any longer so we can use the money to go to school. This can help us in our own small business efforts as well.
*Opening a second business location, putting money in to new products or increasing marketing endeavors.
*Hiring new or more employees to better handle the day to day operations so you can take a break.
*Go on a much needed holiday.
The most important reason to remortgage is to stop struggling with high payments to find our own freedom.
Remortgage: What is it?
A remortgage is basically taking a mortgage that you currently have and getting a new one. You can do this by either going with a new company or trying to get your current lender to give in and let you redo what you have at this point in time. You do it in order to take whatever payments you currently have and make them lower so you can afford more things or to release positive equity in your home. A remortgage can be done through your bank, a special mortgage broker or a third party company that exists just for mortgage bartering. Once these guys have done all of the leg work you can put it to use to get the loan at the best rate possible.
Problem Remortgages
This does not mean anything other than being a type of mortgage made for people with bad credit. Nearly 1 in 4 people in the United Kingdom have a bad credit mark at some point. This adverse credit can greatly hinder you as time goes on. People with these problems really should reach out to the professionals that are not connected to any specific lender. This is the only way you can ensure that you will get the best rates possible without a biased opinion.
Lower Payments = The Goal
With the world’s financial health in jeopardy and every person scurrying for dry ground like an escaping rat. Bills are growing and there is no end in sight. The purpose of a remortgage, in all reality, is to get a mortgage that is lower than what we currently have. We need lower interest, lower monthly payments and a longer payback period. The deals are out there especially now with the down turn in the financial market. Your best bet is to find another lender as your current one most likely will not succumb to your pleading. The time to act is now because burying your head in the sand will not make it all go away.
Releasing Equity Through Remortgaging
If you are a good risk that means you were able to avoid any huge financial blunders. Your bills are paid, you have a decent mortgage currently and your home has positive equity in it. What this means for you as someone wanting to remortgage is that you can get money out of your home MORE than what you currently have as a mortgage. Basically you are releasing some of the funds you have already paid. This is great if you have recently lost your job or your property taxes have gone up. It is very much like getting a loan except that the rates are much less than usual plus you have the added bonus of a remortgage rate of low interest and lower payments.
Sometimes a Remortgage is NOT Right
Remortgaging is not not as cut and dry as you would think it would be. It may not be right for you to do it. You have a good job, a decent mortgage rate and you have no lingering bills. Why would you want to risk a remortgage when you will usually have to succumb to a variable rate where your interest will constantly be fluctuating. Remortgaging when you have a good market position can only possibly lead you to paying it back over a longer period of time. If it is not broke; do not fix it. Even if the remortgage appears helpful at this juncture you may be making your short-term loan repayment long-term and wind up paying more without any pension provisions.
Basically you need to think long and hard about remortgaging because it can help you out greatly but can also hinder you down the line. If you are currently in debt and need to get your head above water then remortgage now! The time is right since the market is at a low and bankers are fighting for business. Do not wait until the market decides to turn around or you may be caught between a rock and a hard place. If you have a way out – take it – the risk is minimal and the benefits high. The consequences of faltering and lingering may find your position worsening as time goes on.
