Is a 65% LTV remortgage a good idea?
Lenders who offer 65% mortgages
Do you need to remortgage your property in order to free up some of the capital from the bricks and mortar? Most people need to have a serious think about whether remortgaging is the right way to proceed, but if you are determined that this is the right way to go, then you should start asking yourself how much you want to get from your remortgage agreement. If you need a serious amount of money, then you might consider asking for a similar amount for the remortgage as you received on the original mortgage. Loans of up to 65% LTV are possible if the bank is willing, but you need to consider whether this is the right solution to your problems.
Do you want a full mortgage again?
Before you agree to take out a 65% LTV remortgage, it is important to remember that this will return your debt to the same amount that it was when you bought the property. If you have been paying the mortgage for 10 or 15 years, that is a lot of money to take from a loan, and also a lot of money to start owing again. You may still own 35% equity in the home, but you will have a huge debt to start repaying again, and this can be daunting to any family.
Ask yourself if you really need the full 65% LTV equity that is being offered, or whether you can take out a personal bank loan for less, and for a lower interest rate. If there really is no other option than taking out the mortgage again, then perhaps you could do a different deal where you only receive 25% of the mortgage. You will have to balance the debt which still exists on the first mortgage with the amount of money you want to take out via the loan, and try to get the most money for the smallest amount of remortgage.
When is the best time to remortgage?
If you decide that you want to go ahead, then you may want to consider taking out the new mortgage at the most opportune time. There are a few occasions when a remortgage can be perfectly timed to benefit the borrower, including when the fixed rate period of your first mortgage is coming to an end, or when your stepped loan is moving up towards the full interest rate. You may also choose to ask for a remortgage deal if you think that you can get a lower interest rate. If you own a £70,000 mortgage on your property, then reducing the payments from the top of the interest rate, over 5%, to a lower charge of just over 4%, then you could save yourself plenty of money each month. Making those savings can be the best motivation for choosing to remortgage your property within a few years of agreeing the mortgage, and many borrowers choose to do this in order to increase their savings.