Types of Mortgages

 A remortgage refers to the process of switching your current mortgage deal to a new one, either with your existing lender or a different one. Unlike refinancing, which typically involves borrowing additional funds, remortgaging is primarily focused on securing a better deal on your existing mortgage.

How Can Remortgaging Benefit You?

1. Reduced Monthly Payments: One of the most significant advantages of remortgaging is the potential to secure a lower interest rate. By switching to a new mortgage deal with a lower rate, you can decrease your monthly payments, offering immediate relief to your finances.
2. Access to Equity: Over time, as you make mortgage payments and your property increases in value, you build up equity. Remortgaging allows you to access this equity, providing you with a lump sum or a line of credit that can be used for various purposes, such as home improvements, debt consolidation, or investments.
3. Fixed Rate Security: If you currently have a variable rate mortgage and are concerned about potential interest rate fluctuations, remortgaging to a fixed-rate deal can offer stability and peace of mind. With a fixed-rate mortgage, your interest rate remains constant for a specified period, protecting you from sudden increases in monthly payments.
4. Debt Consolidation: If you have multiple debts with high-interest rates, such as credit card debt or personal loans, remortgaging can be an effective strategy for consolidating these debts into a single, more manageable payment. By using the equity in your home to pay off high-interest debts, you can streamline your finances and potentially save money on interest payments.
5. Home Renovations: Whether you're looking to upgrade your kitchen, add an extension, or renovate your entire property, remortgaging can provide the funds needed to turn your home improvement dreams into reality. By tapping into your home's equity, you can finance renovations that enhance your quality of life and increase the value of your property.

 You may have to pay an early repayment charge to your existing lender if you remortgage.

 Think carefully before securing other debts against your home.

 You are classed as a home mover if you have a mortgage on your current home and plan to move to a new property. You don't necessarily need to change your mortgage in order to move home, but you have the option to do so. 

For example, you may be able to port your existing mortgage over to the new property subject to criteria, so if you're on a particularly good rate and don't want to change products, this may be an option.

 What are Shared Ownership Mortgages?

Shared ownership mortgages, also known as part-buy, part-rent mortgages, enable individuals to buy a share (typically between 25% and 75%) of a property from a housing association or developer. The remaining share is owned by the housing association or developer, who charges rent on this portion. This scheme is particularly beneficial for first-time buyers or those with limited financial resources.

How Do Shared Ownership Mortgages Work?

Shared ownership mortgages work differently from traditional mortgages in several key aspects:

1. Ownership Share: Buyers purchase a share of the property, which can vary depending on their financial capacity. The initial share typically ranges from 25% to 75% of the property's value.
2. Rent Payments: In addition to the mortgage repayments on the share they own, buyers also pay rent on the remaining share owned by the housing association or developer. This rent is typically below the market rate and can make homeownership more affordable.
3. Staircasing: Over time, buyers have the option to increase their ownership share through a process called staircasing. This allows them to buy additional shares in the property, eventually leading to full homeownership.
4. Eligibility Criteria: Shared ownership schemes often have specific eligibility criteria, such as income caps and residency requirements. These criteria may vary depending on the housing association or developer offering the scheme.

Benefits of Shared Ownership Mortgages

1. Affordability: Shared ownership mortgages provide a more affordable pathway to homeownership, allowing buyers to purchase a share of a property with a lower deposit and smaller mortgage repayments.
2. Flexibility: Shared ownership schemes offer flexibility, allowing buyers to increase their ownership share over time as their financial situation improves through the staircasing process.
3. Security: Shared ownership provides security and stability for buyers, offering the opportunity to live in a property they partially own and build equity over time.
4. Access to New Builds: Shared ownership schemes often involve newly built properties or developments, providing buyers with the opportunity to purchase a modern home in desirable locations.

If you have a poor credit history, you may think that it's not possible to get a mortgage. This simply isn't true. There are many lenders that will offer a human approach to assessing a mortgage where there has been a history of arrears. 

How Do Adverse Credit Mortgages Work?

Adverse credit mortgages work differently from conventional mortgages in several ways:

1. Lending Criteria: Lenders offering adverse credit mortgages have more flexible lending criteria compared to traditional mortgage providers. They take into account factors beyond credit scores, such as affordability and the circumstances surrounding past credit issues.
2. Higher Interest Rates: Due to the higher risk associated with adverse credit borrowers, interest rates for these mortgages are typically higher than those for standard mortgages. Borrowers may also face additional fees and charges.
3. Higher Deposits: Adverse credit mortgage lenders often require higher deposits to mitigate the increased risk. This means borrowers may need to provide a larger down payment compared to borrowers with stronger credit profiles.
4. Specialist Lenders: Adverse credit mortgages are often provided by specialist lenders who specialise in catering to borrowers with credit issues. These lenders have a deeper understanding of the challenges faced by borrowers with adverse credit and offer tailored solutions to meet their needs.