Important Points Aiding in a Remortgage
The time has come to consider a remortgage. You have an idea of how much is needed. You have a really good idea of where you want the interest rate to come in at. You also have a good idea of what you will do with the cash which has been freed up in the process. Now comes the more difficult part - being able to obtain the remortgage through a qualification process. The qualification process is thorough, and for good reason. The lender is taking a major risk with you or anyone else who comes in looking to remortgage the most costly item of their life. Before even starting the thorough process of seeing if you qualify, there are several factors which need to be in order to get the best offer from the lender.
Lenders typically check several things right out of the gate to see if they can get a good idea of what kind of risk they are accepting to offer you a remortgage product. One of the most prominent features of your complete profile to analyze risk, is your credit score. Spending time to get it boosted to its highest point before approaching a lender is the wisest thing to do. Ways to improve credit score are simple, yet few people ever put in the effort. Making sure all debt payments are current is a great place to start. This is a simple task for most people. Make sure that all payments are current. Some will consider current as past the due date, but not past the late penalty charge date. Do your best to see they are all as current as possible. Make sure any impression you provide of your financial picture is a good one.
Next, take a look at the loan to value ratio for the remortgage loan. An attractive loan to value ratio is anything below 80%. In tough times, even below 70% will be more attractive. The loan to value ratio is the amount of the loan against the value of the house. For example, if a home is valued at 100,000 pounds and a borrower is seeking a remortgage loan of 80,000 pounds, a quick calculation gives a loan to value ratio of 80%. As much of the principal that can be paid off before approaching a lender, the better. Lenders simply see more risk in a loan to value that is very high, and typically will withhold the best deals. Try making some overpayments if possible to pay down some more of the principal.
Thirdly, look at the debt to income ratio that you are currently carrying. A debt to income ratio lets the lender see how much of a strain it is to pay your monthly mortgage and still have enough to live on. An attractive debt to income ratio is typically anything less than 35%. That means the total amount of the monthly mortgage does not exceed 35% of the take home income. Lowering the debt to income ratio is done by decreasing the amount of the monthly mortgage or increasing the amount of the take home pay. Again, it might take a few months but take the time to improve how you look on paper. This will make a sizeable difference in how good the offer is coming from the lender.
Think of a remortgage from the lender’s side of the desk. It will motivate you to get your financial snapshot looking healthier, and improve your chances of an attractive remortgage deal offer.