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Want to take control of your finances….debt consolodation might help

There are positive steps you can take to reduce your monthly outgoings. One such way is debt consolidation.

If you are juggling costly unsecured borrowing (on store or credit cards for example), it is likely that you will be paying significantly more interest, and therefore higher monthly payments than if you were to consolidate your borrowing into one secured loan.

When you consolidate debt, not only can you reduce your monthly outgoings, but you can also put in place an achievable plan to pay back whatever you owe.

How does a debt consolidation mortgage work? Typically, you take out a mortgage that is large enough to pay off an existing mortgage, whilst also covering any other existing debts. There are two main options: Remortgage or Second Charge Mortgage.

1. Re-mortgage
A re-mortgage allows you to switch your existing mortgage and any other outstanding debt to a new deal. This could either be with your existing lender or a new provider. The new mortgage is secured against your existing property.

Key Benefits:
• Reduces your outgoings to one monthly commitment, making it easier to budget.
• Provides better rates than on standard loans/credit cards etc., helping you to pay off your debts quicker.
Considerations:
• Whilst a re-mortgage could save you money each month, you may have to pay charges and fees to both your existing and new lender.
• However, Mortgage Pursuit can help with this – as a ‘whole of market’ mortgage broker, we can assess every available product and recommend the best possible solution for your requirements.

2. Second Charge Mortgage
A second charge mortgage, also known as a ‘secured loan,’ works just like a normal mortgage, in that it is secured against your current property. However, the loan is granted by a different lender, on different terms. This gives you the freedom to secure the best deal, without changing your existing mortgage provider.

Key Benefits:
• Second charge lenders tend to be more flexible, which can be beneficial in certain situations, for example, some lenders may be prepared to offer a higher maximum loan amount or consider individuals with a poorer credit rating.
• If you have a great deal on your current mortgage and want to keep it, a second charge will not impact on this.
Considerations
• Second charge mortgages tend to incur higher rates than traditional mortgages, so you may end up paying more than if you opted for a re-mortgage.
• You may also have to pay a slightly higher arrangement fee to the provider.
• Please be aware that when you consolidate debt, it is transferred from unsecured to secured debt. Your home may be at risk if you fail to keep up repayments on a mortgage or other debt secured against it. You should also consider that whilst spreading your debt over a longer period will save money each month, you may end up repaying a higher total amount.

With a quick call to Mortgage Pursuit, we can help you get your finances back on track.

 

Help for First Time Buyers

For first time buyers getting a mortgage is all about raising the deposit and ‘how much is the maximum I can borrow’. A minimum 5% is currently the norm, but by opening a Help to buy ISA the government will add up to 25% to your savings,
The process of determining the maximum you can borrow has become a little more complex in the last few years with mortgage lenders now taking many more factors into consideration. With this in mind there would be a definite benefit in getting mortgage advice at least 3 months before you are ready to move forward.

More help for First Time Buyers!

Just a few weeks ago another mortgage lender we work closely with launched a joint borrower sole proprietor mortgage range, aimed at assisting parents in getting their children onto the housing ladder without being on the title deeds. This means that the property is solely owned by the child. The parents, as a non-legal owner, will have no entitlement to the property (including any rental yield if the property was let).
The key advantages of joint borrower sole proprietor mortgages are that there is no stamp duty surcharge payable by parents, the parent’s income is used when assessing affordability which may help to increase the amount the child can borrow, and the parents will be able to assist them if they struggle to make repayments.
And the joint borrower doesn’t necessarily have to be a parent, some lenders will also accept grandparents and close relatives to be named on the mortgage. This makes this type of mortgage also a fantastic option for people who have been through a major life event, such as a divorce, and now need the support of a family member on the mortgage to enable them to remortgage their current property or purchase a new property.
Joint borrower sole proprietor mortgages have grown from strength to strength following the government implementing a 3% stamp duty charge on second homes because they allow the parents and family members to better support their family during challenging times. For example, the average deposit for first-time buyers has hit £80,000 in London and £20,000 outside of London*, house prices continue to rise and mortgage lender’s affordability assessments have become more comprehensive.

A few important things you should know …
• The maximum age of one of the applicants on the mortgage can be as high as 80 years, which means the mortgage can be spread over an affordable term and grandparents can even be named on the mortgage
• Many lenders offering joint borrower sole proprietor mortgages also allow the deposit to be gifted from a family member
• Usually up to four borrowers can be considered on one mortgage application, which means four incomes can be taken into consideration when assessing affordability
• Joint borrower sole proprietor mortgages can be used for customers who are looking to purchase a property for themselves or an investment property.

Please contact us for more information on whether a joint borrower sole proprietor mortgage is the most suitable solution for your borrowing needs.

Why choose Mortgage Pursuit?

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  • We compare every lender in the market place to ensure you get the best deal to suit your needs.
  • We offer exclusive deals not available on the high street.
  • A personal friendly service offering Straight forward advice and support from application through to completion.
  • Completely free initial consultation offering expert advice to help you plan your next move.