Specialist financial adviser Gordon McMillan from Wesleyan Financial Services discusses remortgaging and how to get the best deal during times of high interest rates.
There may be several reasons for remortgaging. It may be because your fixed term contract is coming to an end. You may be moving property due to life events, switching mortgage to a buy to let mortgage, or extending to make room for a growing family. You could be looking to borrow more to pay for home improvements, or remortgaging when your home has increased in value.
Whatever the reason, you are not obliged to remain with your original lender for the full term of the mortgage, and in most circumstances, it is advantageous to look beyond your current provider at the end of your current deal.
For dentists however, getting the best deal on a mortgage can sometimes be more challenging than for other professions, due to the often complex nature of their incomes. Even practice owners with a high income from an NHS contract or private practice may find themselves turned down by some lenders.
The nature of the way self-employed people pay tax in arrears can sometimes make it difficult for lenders to understand income patterns and predict future incomes. As a consequence, this can potentially make it harder for them to reach a lending decision.
We know that many dentists reaching the end of their mortgage product are facing sharp increases to their mortgage repayments. Financial pressures, in addition to an already busy and demanding work schedule and personal commitments, can be extremely stressful and many dentists don’t know who to turn to for support and guidance.
It is not uncommon for us to talk to clients who bought their property over four years ago on a fixed interest rate of 1.6% for example. They may also have financially stretched themselves at the time of the initial purchase in order to acquire their dream home.
However they now find themselves in the position of needing to find a new deal, but in the current market are now faced with much higher rates of interest. Depending on circumstances, this may start at around 5%.
To put that into perspective, let’s imagine a client with a £300,000, 20-year mortgage remaining. They are reaching the end of a mortgage product of fixed monthly payments at an interest rate of 1.69%.
Under their current deal, the client is paying £1,474 per month. Rates like that however are no longer available. Therefore, if we perform the same calculation based on current interest rates – for illustrative purposes let’s say 5.25%, the monthly payments would now be £2021.00 per month – an increase of £547 per month.
This increase in cost is purely because of the increased interest rate, none of the extra repayment is going towards clearing the debt. This is a significant rise in payment, making it important that dentists looking to remortgage get the right advice.
As whole of the market providers, we have experts who can help those reaching the end of their mortgage product to find a suitable deal – our specialty is finding mortgages for dentists.
When it comes to remortgaging it can be difficult to know where to begin. Whether it be in the branch on the high street, online through a comparison site, or with a broker, there are so many ways to source a mortgage.
But are they all offering the same service? While there is no single entity that has access to every lender in the marketplace, a key differentiator is using an adviser that understands both the mortgage market, and your profession.
For some lenders a self-employed dentist’s application may be rejected on the basis of insufficient years of accounts. The advantage a specialist adviser can offer in this case is knowing which providers can help in which situations.
Where some lenders may reject a dentist’s application that doesn’t tick the right boxes, there are other lenders that will ask them for an explanation of where the client is now and what their progression is.
For some mortgage providers, dentists are attractive customers, as dentistry is a traditional and highly regarded profession. Some lenders are willing to offer either better deals or personalised underwriting rather than an algorithm driven decision.
Our specialist financial advisers only work with dentists and understand their career progression and all the different permutations that form a dentist’s income. Whatever the makeup of your income, we can help.
If you need help in remortgaging, moving or buying your first home, our dental specialist financial advisers can assess your individual circumstances. They can recommend lenders from the whole of the market best suited to your unique needs to give you the best chances of both a good deal and a successful application.