How do people use financial leverage to purchase properties in UK?
27th 5月 2015
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British mortgages are quite different: remortgage can reduce the monthly repayment, make the appreciation and achieve realization? It’s true!

In China, the loan interest rate of every bank is the same. When you start to repay the loan, normally you just let it there and don’t have to change it even for a decade or two. However, the mortgage in UK is very different. If you are British immigrant families or investors who just land on UK, you may not know, in the long time of repayment, to do the remortgage every few years can bring you many benefits! It’s an effortless financial trick! Today, Ocean-Tide will give you a good explanation.

What is a remortgage?

In brief, remortgage is the process of transferring your mortgage from one lender to another.

One may wonder why do I need to remortgage?  There are three main reasons:

  1. To reduce monthly repayments with cheaper loans.
  2. To restructure the loan schemes according to the need and to change the current repayment amount and the term
  3. To turn the appreciation of the property into cash.

For the first reason, there are many banks and mortgage lenders in UK and each has its own characteristics and different loan requirements. With the changes in market, bank’s loan products and specific requirements will also change.

Therefore, only by keeping abreast of the latest market information and timely remortgage, can you ensure that your loan is not outdated and that you do not pay too much to the bank. If you want to know whether your interest rate is appropriate, or whether you are paying too much every month, the best way is to pick up the phone and ask for your mortgage consultant.

We have a lot of customers who don’t know about product comparison or the mortgage can be converted, so they give their money which could be saved to the bank. Some people, in the beginning of applying for a loan, may not meet the requirements of some low interest banks and financial institutions, but with the change of the market, they has been in line with the conditions. However, they do not know it and miss the good opportunity, which causes the waste of money and time. Therefore, if your fixed-interest mortgage term is only left six months, or your interest is floating, please get in touch with your loan consultant as soon as possible.

There are many examples of the second reason for remortgage. For instance, some families need to reduce their mortgage repayments due to some reason. The mortgage scheme can be restructured reasonably to reduce monthly repayments to a much more comfortable amount.

However, what should be known is that to reduce the monthly repayment by extending the maturity of the loan, would mean an extension of the repayment period and an increase in the total amount of interest paid on the loan. Sometimes, you can shorten the loan term with the repayment unchanged by finding cheaper mortgage rates, and pay off the loan as soon as you can.

The third reason mainly aims for real estate investors. Take the London property market price change as an example.

In the past two decades, the average price of real estate in London has risen from around 100k pounds to more than 500k pounds today. Basically, it doubles every 9 to 10 years. This is why more and more people are attracted to invest in properties here.

But after all, personal funds are limited, and the properties in London are expensive. How can you take the lead in this invisible race? For investors who are good at using real estate financing tools, bank financing is undoubtedly their multiplier of development and the magic weapon to win.

After the first round investment, how do you make another round in just a year or two without selling your property or using additional capital? It still relies on the combination of mortgage and remortgage.

It is easy to say in this way but not to get it done. It involves the design of real estate financing schemes, the choice of lenders, the selection of products and other details. Therefore, it is not hard to understand why successful real estate investors tend to have excellent property mortgage consultant around them.

Your home may be repossessed if you do not keep up repayments on your mortgage.

The Financial Conduct Authority does not regulate some forms of Business Buy to Let Mortgages and Commercial Mortgages to Limited Companies. Not all services we offer are regulated by the Financial Conduct Authority. Your home may be repossessed if you do not keep up repayments on your mortgage. 

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