TaxAssist Financial Services experts discuss top tips on re-mortgaging and changing your lender, and explore the pros and cons of Fixed Rate, Variable Rate, and Tracker mortgages. Plus our experts explore how to prepare for a mortgage application if you're self-employed, and delve into the world of Buy-to-let, HMO, and Commercial Mortgages.
Available on demand
If you missed our Mortgage Release Webinar, it’s now available to watch on demand. The webinar features mortgage experts Simon Restieaux and Hatty Lawrence. Watch the complete webinar or watch the section or sections that interest you. The webinar has been broken down and the following topics are available to watch:
- Latest market conditions: will mortgage rates come down in 2024?
- Top tips on re-mortgaging and changing your lender.
- Advantages and disadvantages of Fixed Rate, Variable Rate and Trackers.
- Self-employed mortgages – how to prepare for a mortgage application.
- Buy-to-let, HMO, and Commercial Mortgages.
- Which insurance products are available to cover mortgage payments.
Whole webinar
Latest market conditions: will mortgage rates come down in 2024?
Top tips on re-mortgaging and changing your lender.
Advantages and disadvantages of Fixed Rate, Variable Rate and Trackers.
Self-employed mortgages – how to prepare for a mortgage application.
Buy-to-let, HMO, and Commercial Mortgages.
Which insurance products are available to cover mortgage payments.
Mortgage Webinar: Your questions answered
The webinar included a question-and-answer session and we have answered all the questions below:
Question: Do most fixed rates allow overpayments all be that a percentage?
Answer: Yes, all fixed-rate mortgages will give you the ability to make some form of overpayment. Whether that be 10% or 20% of the outstanding balance at that time. This can be very helpful if you have any extra funds that you want to use to pay off the mortgage, you can then either reduce the balance and the term of the mortgage, or in some cases, it can actually reduce payments however that will vary from lender to lender and so yes in short there is an overpayment facility.
Question: Are fixed-rate mortgages typically just the long-term forward interest rate curve plus a premium? I'm surprised to see when they expire that they go to some sort of high variable rate that looks very unfavourable unless remortgaging or re-contracting is this just to incentivise you to re-contract and if doing so willing income be tested again? So if they were unemployed would you be on a punitive rate and can't re-mortgage?
Answer: There is an interest rate curve plus premium. Lenders will always set their rates to be appealing but hedge their bets against what they predict may happen in the future.
Once a rate expires it will move to the lender's standard variable rate, which is usually very unattractive and higher than rates currently offered. This will lead you to either refinance away from your current lender to a new one, or to speak to your existing lender and look at switching the product with your existing lender which we can also support you with. So in a way, it does incentivise you to re-contract and to go and look for other mortgage providers.
If you're unemployed or your income has dropped significantly approaching a new mortgage provider may cause complications. This is because if the income that you have or don't have won't support your mortgage then any new lender can't offer you a new product. However, the luxury of already having a mortgage in place means you can speak to your existing provider and when they switch the product usually with most lenders there are no affordability checks because this is because they already hold the debt and the risk instead of making you pay more on the standard variable rate they want to put you in a better position and get you on to a better rate of interest so you can product switch and usually with the same lender and there are no affordability checks done.
Question: If you were to remortgage today for an interest-only buy-to-let would you choose a three or five-year fixed rate based on your prediction of interest rates in the year to come?
Answer: Unfortunately, it's not such a cut-and-dry question because it depends on your individual future plans for that buy-to-let. If you want the stability of knowing exactly what you're paying going forward, then a fixed rate provides this for you. If you want that flexibility in the short term, a three year would be more advantageous. We can provide a more personalised answer to that based on your circumstances.
Question: Do you offer let-to-buy mortgages? Can you touch on how these work?
Answer: Yes, we do offer let-to-buy mortgages. In terms of how these work – it’s when you want to convert your current residential property into a buy-to-let and release some equity in order to put a deposit onto your new main residence. We can absolutely help with those. What you'd need is an assessment of how much rent your current property can raise when rented out and then we can look to see how much you can raise and whether that can clear your existing mortgage and allow you to raise some additional funds for a deposit. We then look to see with the deposit that you're able to pull out your current property plus any other funds you've got and what onward mortgage you can look at. So it's one part turning your current mortgage into a buy-to-let and a second part looking at your own residential mortgage so yes we can absolutely help with that.
Question: Are Tracker mortgages likely to have a higher rate than fixed-rate mortgages?
Answer: Now potentially yes but it gives you that extra flexibility that if you feel like rates are likely to come down your rate will track that Bank of England base rate and in the event of any base rate reductions your rate would go down in line with this, however, there is also the risk that rates may increase. Currently, a tracker rate would be coming out higher than a five-year fixed rate but you've got the advantage if rates reduce that rate would also reduce but you do have that uncertainty that it could go up as well.
Question: My wife is 50 and I am 79, I'm the bigger income earner but we can't get a mortgage big enough to buy a larger property than our current property.
Answer: We'll be more than happy to look at the whole of the market mortgage proposition that we've got. Look at the options that are available to you and see if there is anything that we can assist with allowing you to see if we can get you that increased mortgage in order to move on.
Question: Is it possible to change and transfer a buy-to-let mortgage to a residential mortgage for your main residence (which is also where your limited company is registered) so you can pay the mortgage through your limited company.
Answer: Firstly, is it important to note that if it's your main residence it should be on a residential mortgage rather than a buy-to-let mortgage. You can’t hold a mortgage for your main residence through a limited company, it would need to be held in your personal name. So, if you're paying it and if your income is through your limited company, you would need to pay that to yourself as an individual and pay through salary and dividends and then pay your mortgage payments from your own income. So you can't pay your main residential mortgage through a limited company. If it's a buy-to-let through a limited company then yes that can be done but not for your main residence.
Question: Do we deal with self-build mortgages too and can you give us any ideas on how interest rates compare to normal mortgages?
Answer: Self-build mortgages are still out there however the providers that offer them are more limited. In terms of what interest rates are available that would be on the basis where if you would like to again contact us we can look at your personal details because it's not a one-size-fits all proposition on self-build mortgage. What we do know is that they usually work on the basis that they release money in stages. You will receive different tranches of money at different pre-agreed stages of the build. It is all checked by the banks surveyor to make sure that they're happy with the building work that's been completed and that it's up to regulations before the next tranches of money are released. We can talk you through self-build mortgages and how we can go about sourcing self-build mortgage products.
Additional Tools: Repayment Mortgage Calculator
Looking to understand your potential mortgage costs at different interest rates or how extending the term could reduce monthly payments? Use our Repayment Mortgage Calculator to calculate the approximate monthly cost of your mortgage, as well as to understand the impact of interest rate increases on your monthly payments. As well as exploring how the mortgage term, interest rate and deposit amount impact your monthly payments.
Some Buy to Let and let to buy mortgages are not regulated by the Financial Conduct Authority.