Can I change my mortgage? - a question often asked when the mortgage repayments are getting hard to finance, but although a "yes" answer is usually always forthcoming, there are some very important considerations to take in to account.
1. Are there any early repayment charges?
If you took a special rate for a specific term, then it is likely that there will be penalties to pay if you try and alter the conditions of the mortgage before the allotted term has expired. For instance, a typical 2 year fixed rate will have early repayment charges that will last until the 2 year term has expired. However, some fixed rates will have penalties that extend past the special rate end date, so a careful analysis of the terms and conditions of the mortgage will be needed to avoid a costly mistake.
2. Have your financial or domestic circumstances changed?
If your income has dropped, job changed, spouse or partner no longer living in the property, credit risk profile changed (late payment on a credit card, for instance) or a multitude of other changes that take place in everyday life, then it will have a direct impact on your ability to change the mortgage for something else, or change lender.
Want to Change Interest Rate ?
a change of interest rate is something that will happen automatically when you come to the end of the allotted interest rate term or if you are on a variable rate already. Interest rate changes can also happen for other reasons. An example is where you decide that you want to let the property out to tenants. On informing the mortgage lender they will probably alter the interest rate and terms to suit. This can mean an increase in the interest rate, as the lender now views this mortgage as a commercial enterprise and that was not what they
originally advanced the mortgage for. Of course if you are currently on a standard variable rate, then changing to something else like a discounted rate or fixed arte should simple and done with the existing lender, unless another lender has better terms, in which case the link above should help you locate the lenders and their latest offers.
Want to Change Borrowers ?
This is a tricky one, as anyone who has attempted it will tell you! When you originally took out the mortgage it was based on the incomes and credit profiles of the original borrowers. This means that if one borrower now wants to be removed from the mortgage agreement and another substituted, then the incomes credit profiles, jobs etc must be acceptable to the lender or they simply wont agree it. The same applies if a joint mortgage now wants to be changed to a single mortgage ( take one of the two borrowers of, and the remaining borrower to take the mortgage on their own.) Before the lender will agree to this, they will have to satisfy themselves that the remaining borrower has the financial capacity to meet the monthly mortgage payments on their own. If not the lender will not let the second person go. They will be tied to the mortgage, and all its responsibilities until the mortgage is redeemed or the remaining borrower can handle it on their own, and this is the LENDERS Decision and nobody else's.
Change the term of my mortgage ?
This is usually fairly easy to do, providing the new mortgage term does not extend past the borrowers retirement age. If it does, then the lender will have to agree that the borrowers income at retirement is sufficient to make the monthly mortgage payments or they wont agree it.
Change the method of repayment from endowment to repayment (capital and interest) ?