You were probably very excited when you got the opportunity to buy your first home. The reasons why people decide to live alone or with a partner are different. Some young people simply want to start a new life without their parents. On the other hand, marriage is also one of the common reasons why people decide on this move.
Yet, will you live in the same house for a while? Well, in some cases, it may happen that you would want to purchase a second house. Just like in the previous case, there are a lot of reasons why people decide on this move. Most commonly, people do that because they want to have another residence or they simply look for the so-called buy to let property. The second option is mostly good for those individuals that want to make some long-term investments.
Generally, the expenses you will have to deal with for the second property can be high. Before everything, you will have to pay a deposit that is mostly not low. Despite that, the taxes for the second property are also high, so you should put those costs into consideration. After you read the previous part, you probably think now “How am I going to afford to buy another property?” That is the reason why we would want to tell you whether you can remortgage to buy another property or not.
The shortest answer we can give you is – yes, you can remortgage to buy another house. It is an excellent alternative for all the people that do not have enough money to purchase another property. But, we are pretty sure you would want to hear more than that.
You Can Find an Assistant Throughout the Entire Process
When people see tons of paperwork, they simply give up on any type of process, including remortgaging. Fortunately, there are mortgage lender conveyancers that can assist you throughout the entire procedure. There are websites where you can compare the prices and services with a couple of clicks. You can be informed on Conveyancing about all the details before you even decide to invest a single penny in the entire process. We are sure this is going to make things easier for you a lot.
You Need to Share Your Reasons with the Mortgage Lender Conveyancer
Everything starts with good communication. You need to clearly explain why you need a second property. In most cases, people do that because they want to invest in but to let mortgage. Some people will move to another house and lend the first one while others would do quite the opposite.
Despite that, some people need a new property because they want to spend their free time and holidays outside of the town. If you are living in an urban area, then you definitely know how annoying it can be to spend weekends with a lot of noise and crowds.
Finally, some people decide on this move because they want to invest in a business property. Even in those cases, a lot of lenders will put into consideration your offer. All you have to do is to clearly explain the goals you have and help the lender give you the best possible offer.
So, How Exactly Can I Remortgage One House to Buy Another One
Well, mortgaging and remortgaging are all about numbers. The main factor that influences the entire process is the equity of your first property. However, there are a few more of them that we would want to highlight in this article.
As Mentioned – Equity
The first task is to calculate the value of the entity, which is a pretty simple thing. All you have to do is to take the value of your current property and take away all the loans you have on it. Let’s say the value of your current property is £200 000 and the loan is around £80 000. That would mean that your equity is around £120 000. Yet, the equity is never calculated as a number; you will have to represent it as a percentage. In this case, it will be more than 50%.
In case you want to remortgage your current property, there are two alternatives available to you. You can do a so-called “full remortgage” where you will replace the original mortgage. On the other hand, you can also use the option of “second charge mortgage” where you can get a separate loan that is going to be secured on the home.
The Income You Have Is Also an Important Factor
The income of the homeowner plays a significant role in the remortgaging process because it precisely determines the size of the mortgage. In most cases, the lenders will allow a mortgage that is 4 times bigger than your income. Of course, in some cases, the ratio can be even bigger, but that depends on the lender that you find.
When you read “income“, the first association is probably salary. However, there are also some other things you need to put into consideration. The lender will pay attention to your annual income as well as potential bonuses and dividends that you have. Despite that, if you are a parent, then child benefits will also be on that list.
Credit Status Matters As Well
The credit status is also an essential factor that will influence the remortgage process. In case your credit status is poor, the mortgage offer may not be as you would want. That is the reason why you should try to improve your credit score before even starting the remortgaging process and ensure in that way the offers you get are good.
There is one thing that we have to say here. The improvement of the credit status is not going to last forever. For only three months, you can fix it completely. However, something like that requires a lot of patience.
Generally speaking, you can remortgage your first property to buy another house. However, you need to put into consideration all the factors that we mentioned in this article. Be patient and try to improve your credit status for a couple of months. Hire a good mortgage lender that will assist you throughout the entire process.