PUREvil's Blog

Author: Joe Kocsis

A Self Cert Remortgage and the Self Employed.

Many self employed people in the UK are experiencing difficulty in proving their incomes and as a result they are struggling to apply for a mortgage or a remortgage.

If you are having difficulty in proving your income due to your earnings being erratic, seasonal trends, get paid in dividends, or require a bad credit remortgage as you may be struggling meeting your mortgage commitments through a spiralling debt problem. Help is available.

“ The Office of Fair Trading (OFT) estimates that, in 2002, £32 billion of unsecured lending and £8.8 billion of secured personal lending were used for debt consolidation. This compares with an estimated £18.4 billion of unsecured lending and £2.4 billion of secured personal lending in 1999. The value of credit card balance transfers in the first ten months of 2003 was £13.6 billion, compared with £11.6 billion for the whole of 2002. Not all of these transfers will be debt consolidations. Mori Financial Services (MFS) estimate that about 15 per cent of all transfers involve consolidation of more than one credit card balance.”

From this information, we can glean that debt consolidation is at an alarming rate and we are talking about £50 billion per year and growing.

Debt Consolidation Remortgage

There are many reasons for considering a debt consolidation remortgage but generally debts are consolidated to reduce outgoings by either placing the new loan over a longer term or by reducing the interest rates paid by moving to a lower interest rate and paying the loan back quicker. So on the face of it, these are positives but there are negatives also.

· Are you moving the loan from an unsecured to a secured loan?
· Are you moving from fixed rates to variable rates?
· How much will you repay over a longer term?
· Will you pay extra fees that are added to the loan?
· Will you have to take out Payment Protection Insurance?
· Is the loan flexible for over and underpayments?

Bad Credit Remortgage

Research in the UK has indicated that as many as 1 in 4 people have had an adverse credit or bad credit history in the past. Debt reports in national UK newspapers indicate that debt problems are spiralling out of control but it has now become easier than ever before to take out more debt by applying for loans, credit cards, mortgages, and to remortgage lenders.

This was all well and good whilst interest rates were low and rates were just above the UK retail prices index level (RPI). It just didn’t make sense to try and save, as it was cheaper to borrow now, buy now and pay later. But this can’t carry on indefinitely and as interest rates start to rise, as they will, the debt will bite into peoples circumstances even harder.

If you are having trouble paying your current mortgage, loan or credit cards or you think that you are not receiving the best mortgage deal you possibly can, then, perhaps it is time to think about a remortgage or at least getting a remortgage quote. However, many people are unsure about the relative benefits and problems of a remortgage. Here are some useful tips to help you decide if remortgaging is right for you:

What is a UK remortgage?

A remortgage is when you replace your existing mortgage loan with a new one from either the same lender or a new lender. This is usually done to reduce monthly payments or to release equity. Remortgaging is usually carried out through a remortgage broker, who will then introduce you to remortgage lenders, arrange remortgage quotes and secure the best remortgage rates.

What is a problem remortgage?

A problem remortgage is suitable for people with an adverse or bad credit history. As previously highlighted, research in the UK has indicated that as many as 1 in 4 people have had an adverse credit history in the past. For this reason, these people need to be given advice by specialist whole of market remortgage brokers, as they have access to all the best problem remortgage lenders and as a consequence they can find the a cheap remortgage from the best remortgage lenders

Remortgaging for lower payments

One of the most common reasons to re-mortgage is to get lower monthly payments than you do now. If you are struggling to pay off your monthly payments, then you need to look for a better deal, as soon as you can. If you can find a new alternate lender, then ask your current mortgage lender if they can match the new remortgage lenders quote, if they would prefer to keep you as a customer at a lower rate rather than lose you altogether. If they cannot match the rate then you should look at remortgaging but don’t bury your head as the problem will not go away.

Remortgaging to release capital or equity

Another reason why people remortgage is to get hold of some extra money by releasing equity they may have built up in their property. This means that you borrow more than your current mortgage debt to release the money you have already paid into the property and this extra money may be used for debt consolidation or home improvements. This is especially useful if your property has gone up in price or if you have paid off a large percentage of your mortgage. It is like getting out a loan, but the rates are low as they are part of the remortgage.

Some Potential Pitfalls of a Remortgage

One thing that you should look at before remortgaging is whether or not it is really right for you. There maybe a number of costs involved, such as legal fees and penalties for changing mortgages. These fees could add up and might be more than you can afford. Also, if you borrow more money or you get lower monthly payments, it could mean that you will be paying the money back for a longer period of time.

Although it may seem helpful now, you could end up paying more long-term and if you are still paying the money back when you retired you might be left unable to make the payments without pension provisions.

Remortgaging can help you if you are struggling with payments or you need to free up some money. However, you should think carefully about whether or not remortgaging will be beneficial to you in the long-term but if you have a problem remortgage it could be the ideal situation.

Self Cert Remortgage and the Self Employed

You should be aware that the complexity of taking on a self cert remortgage requires the skills of a competent mortgage or remortgage adviser, as affordability problems need to be considered. The author has been in the UK Financial Services Industry for over twenty years. Follow this link Self Cert Remortgage for further information about a self cert remortgage.