A remortgage can be beneficial in reducing expenditure on monthly repayments and ultimately aid homeowners is saving money. While this may certainly be its primary purpose for many homeowners however, a remortgage also provides a means for those lacking in funds to acquire some much needed cash in the event that it becomes a necessity instead of dipping into their own savings. But the amount that can be borrowed depends on a number of factors and can be a little tricky to ascertain. Here are a few elements that are generally considered by lenders to help them better form an acceptable figure that can be released to the homeowner. So, how much can I borrow?
Income requirements
The first element that can help determine exactly how much money can be released is the income requirements imposed upon the borrower. Not only does this factor into the overall figure, but lenders tend to be far stricter in this area than they were in the past and may conduct stress tests for the interest rate to better assess whether it is even feasible to release the requested amount by the homeowner.
Credit rating
Apart from the income requirements, another area that will be undoubtedly explored and can affect the amount that can be borrowed is the credit rating. Since the credit rating serves as a good indicator of whether or not a homeowner can fulfil their respective financial obligations, the results of its assessment will not just influence the amount that can be borrowed but also directly affect the possibility of even lending the money.
Home equity
No matter the purpose of the acquisition of money, your chosen lender will always check your home equity or its market value when deciding on a figure to release. While the lenders themselves won’t actually be able to make any disputes on the outstanding for the existing mortgage, they will likely make their valuation of the property to check if any disputes exists and if it can affect the LTV or the loan-to-value as it is generally known as.
If by any chance these loan-to-value limits are hit, lenders may opt to lend you far less than if it was reasonably within it. It isn’t uncommon for a lender to leave it up to the homeowner to make up for any shortfalls too. Because of this, it pays to ensure that everything is copacetic and that no disputes exist to get a better figure if not the exact amount that you may require from your chosen lender.
How to get the most out of a remortgage
There’s hardly any point in pursuing a remortgage if the amount that can be borrowed is insufficient or if repayment interests end up being too high to manage. To this end, it’s good common practice to seek the professional help of independent advisers and other specialists in the industry. It’s a small investment that can pay dividends, especially since they can get you a better deal and the information that they can provide will help you make a much more informed decision.
When pursuing a remortgage to secure much-needed cash, it pays to leave no stone unturned. As small a detail as credit rating and income requirements may be, making sure that they are both copacetic can lead to a better figure that can be borrowed. Acquiring the services of professionals in this field can also go a long way not just in the advice that they can give, but in the contacts with major providers that can help you land a better deal what would have been possible without their help.
