Member Article

How Much Can I Borrow if I Remortgage?

Remortgaging can be a savvy financial move, offering homeowners the opportunity to switch to a better deal or release equity tied up in their property. One of the key questions that arises when considering remortgaging is, "How much can I borrow?" This article delves into the factors influencing the borrowing amount in a remortgage scenario and how a remortgage calculator can assist in this process.

Factors Influencing Borrowing Amount:

  1. Equity in Property: The equity you have in your property plays a significant role in determining how much you can borrow. Equity is the difference between the current market value of your property and the outstanding balance on your mortgage. Generally, the more equity you have, the more you can borrow.
  2. Lender's Criteria: Lenders have specific criteria when it comes to assessing how much they are willing to lend for a remortgage. This includes factors such as your income, credit history, age, employment status, and existing debts. Lenders typically use a loan-to-value (LTV) ratio to determine the maximum amount they will lend, with lower LTV ratios generally resulting in higher borrowing amounts.
  3. Affordability: Lenders also consider your ability to afford the repayments on the new mortgage. They assess your income against your outgoings to ensure that you can comfortably meet the monthly payments. This affordability assessment helps determine the maximum borrowing amount.
  4. Interest Rates: The interest rate offered by the lender will impact the amount you can borrow. Lower interest rates typically result in lower monthly repayments, allowing you to borrow more while still maintaining affordability.

How a Remortgage Calculator Can Help

A remortgage calculator is a valuable tool that can provide homeowners with a rough estimate of how much they may be able to borrow. Here's how it works:

  • Input Information: Remortgage calculators typically require you to input information such as the current value of your property, the outstanding balance on your existing mortgage, any additional borrowing required, your income, and monthly expenses.
  • Calculates Loan-to-Value (LTV) Ratio: Based on the information provided, the calculator will calculate the LTV ratio, which is crucial in determining the maximum borrowing amount. LTV is calculated by dividing the loan amount by the property value and multiplying by 100.
  • Estimates Borrowing Amount: Using the LTV ratio and other relevant factors, the remortgage calculator will provide an estimate of the maximum borrowing amount available to you.
  • Comparison Shopping: Additionally, remortgage calculators can help you compare different mortgage deals by inputting various interest rates and terms to see how they affect your borrowing capacity and monthly payments.

Top High-Street Banks for Switching Your Mortgage Deal

Are you looking to save money on your monthly mortgage payments or raise capital for renovations? Remortgaging could be the answer! Here's a quick rundown of some of the top UK high-street banks offering remortgages:

  1. Lloyds Bank: Lloyds offers a variety of remortgage deals, including fixed-rate and tracker mortgages. They also have a user-friendly online remortgage calculator to help you estimate potential savings.
  2. Halifax: Similar to Lloyds, Halifax offers competitive remortgage rates and the convenience of applying online. They even have fee-assisted remortgages that could cover all the remortgaging costs.
  3. NatWest: NatWest are known for their transparent remortgage process and offers various fixed-rate deals to suit different needs. They also only charge mortgage arrangement fees at the point of completion, minimising upfront costs.
  4. Santander: Santander is a strong contender for online remortgages, having won awards for their user-friendly platform. They offer competitive rates and some attractive incentives, like cashback or free valuations.
  5. Nationwide: Nationwide has a strong reputation for competitive remortgage rates and customer service. They offer a variety of fixed-rate and tracker deals, as well as fee-assisted remortgages to help with switching costs.

Remember: This is not an exhaustive list, and many other lenders offer remortgages in the UK. It's crucial to compare rates, fees, and features before making a decision. Here are some additional tips for remortgaging:

  • Check your current mortgage deal: See if you're nearing the end of a fixed-rate term or stuck on a high Standard Variable Rate (SVR).
  • Consider your needs: Are you looking to save money, raise capital, or get more flexibility with your repayments?
  • Improve your credit score: A better credit score can lead to more favourable remortgage rates.
  • Use a remortgage comparison website: These can help you compare remortgage deals from different lenders quickly and easily.

Remortgaging offers homeowners the opportunity to access additional funds or secure better mortgage terms. Understanding how much you can borrow is essential in the decision-making process. Factors such as equity in the property, the lender's criteria, affordability, and interest rates all influence the borrowing amount. Utilising a remortgage calculator can provide valuable insights and assist in making informed decisions regarding your remortgage options.

This was posted in Bdaily's Members' News section by iCONQUER Ltd .

Explore these topics

Our Partners

Top Ten Most Read