Remortgage - Revision history

Designing Buildings at 07:22, 31 January 2021

2021-01-31T07:22:09Z

← Older revision		Revision as of 07:22, 31 January 2021
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	* What is a mortgage?		* What is a mortgage?

−	[[Category:Cost_/_business_planning]] [[Category:Property_development]] [[Category:Public_procedures]]	+	[[Category:DCN_Definition]] [[Category:DCN_Guidance]] [[Category:Cost_/_business_planning]] [[Category:Property_development]] [[Category:Public_procedures]]

Designing Buildings at 08:43, 9 July 2018

2018-07-09T08:43:17Z

← Older revision		Revision as of 08:43, 9 July 2018
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−	A mortgage is a loan taken out to buy property or land. ~~Most~~ run for 25 years but the term can be shorter or longer. The loan is ‘secured’ against the value of ~~a home until it’s paid off. A remortgage (or ‘refinancing’ in~~ the ~~United States) is where a homeowner takes a new mortgage out on their~~ property~~, either to replace the existing one~~ or ~~to borrow money using the property’s value as security~~.	+	A mortgage is a loan taken out to buy property or land. Typically, mortgages are taken out for the purchase of homes and run for 25 years but mortgages are also available for commercial properties, and the term can be shorter or longer. The loan is ‘secured’ against the value of the property or land until it is paid off.

−	Remortgaging ~~does not typically involve moving to a different property to taking out a second mortgage, but~~ is the ~~transference~~ of a mortgage ~~between lenders~~. ~~Often this is~~ done to take advantage of a better ~~interest rate being~~ offered by a different mortgage ~~lender~~.	+	Remortgaging (or ‘refinancing’ in the United States) is the process of taking out a new mortgage on the property or land. This may be done when the terms of the mortgage change, or to take advantage of a better deal offered by a different mortgage product, or to borrow additional money.

−	~~Mortgages~~, particularly ones that offer ~~the most favourable~~ interest rates, ~~tend to~~ only last for a limited time – around 2 to 5 years. When this ends, the ~~mortgage~~ lender will move the mortgage onto a standard variable rate (SVR) which is often higher than the previous interest rate. ~~Very often~~ there ~~are~~ cheaper interest rates available on the market which could save ~~homeowners~~ substantial sums of money ~~if their outstanding loan is very high~~.	+	For example, fixed mortgages rates, particularly ones that offer low interest rates, may only last for a limited time – around 2 to 5 years. When this period ends, the lender will generally move the mortgage onto a standard variable rate (SVR) which is often higher than the previous interest rate. In this situation, there may be cheaper interest rates available on the market which could save the borrower substantial sums of money. As a result, they may remortgage the property.

−	~~Aside from wanting to reduce their overall monthly mortgage payment amounts and save money, some of the most common~~ reasons why ~~homeowners~~ may choose to remortgage include:	+	Some other reasons why property owners may choose to remortgage include:

−	* The property value has ~~rapidly~~ increased since the first mortgage was taken out, making the ~~homeowner~~ eligible for lower rates.	+	* The property value has increased since the first mortgage was taken out, making the it eligible for lower rates.
−	* ~~If there~~ is ~~the~~ concern that interest rates may go up.	+	* There is a concern that interest rates may go up.
−	* In order to pay off the mortgage earlier ~~if the current deal will only allow small over-payments~~.	+	* In order to pay off the mortgage earlier.
−	* To ~~be able to~~ raise capital ~~more cheaply on low rates (~~for ~~the purposes of~~ home improvements, ~~paying~~ off other debts, etc.).	+	* To raise capital for home improvements, to pay off other debts, etc.
−	* For a more flexible mortgage that will allow some payments to be missed (~~what is known as a~~ ‘payment ~~holiday’~~).	+	* For a more flexible mortgage that will allow some payments to be missed (‘payment holidays’).

−	Before remortgaging, it is important that ~~a homeowner~~ carefully assesses all the cost implications. For example, they may be required to pay an early repayment charge to the existing mortgage lender which can be high, as well as ~~a small~~ exit fee. These should be compared with the savings that can be made by switching to a ~~lower~~ mortgage.	+	Before remortgaging, it is important that the property owner carefully assesses all the cost implications. For example, they may be required to pay an early repayment charge to the existing mortgage lender which can be high, as well as an exit fee. These should be compared with the savings that can be made by switching to a different mortgage product.

	= Find out more =		= Find out more =

Editor at 14:40, 4 July 2018

2018-07-04T14:40:12Z

← Older revision		Revision as of 14:40, 4 July 2018
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	* Construction loan.		* Construction loan.
	* Council of Mortgage Lenders.		* Council of Mortgage Lenders.
		+	* Equity and loan capital.
	* Equity in property.		* Equity in property.
	* Freehold.		* Freehold.

Editor: Created page with "A mortgage is a loan taken out to buy property or land. Most run for 25 years but the term can be shorter or longer. The loan is ‘secured’ against the value of a home until i..."

2018-07-04T14:19:25Z

Created page with "A mortgage is a loan taken out to buy property or land. Most run for 25 years but the term can be shorter or longer. The loan is ‘secured’ against the value of a home until i..."

New page

A mortgage is a loan taken out to buy property or land. Most run for 25 years but the term can be shorter or longer. The loan is ‘secured’ against the value of a home until it’s paid off. A remortgage (or ‘refinancing’ in the United States) is where a homeowner takes a new mortgage out on their property, either to replace the existing one or to borrow money using the property’s value as security.

Remortgaging does not typically involve moving to a different property to taking out a second mortgage, but is the transference of a mortgage between lenders. Often this is done to take advantage of a better interest rate being offered by a different mortgage lender.

Mortgages, particularly ones that offer the most favourable interest rates, tend to only last for a limited time – around 2 to 5 years. When this ends, the mortgage lender will move the mortgage onto a standard variable rate (SVR) which is often higher than the previous interest rate. Very often there are cheaper interest rates available on the market which could save homeowners substantial sums of money if their outstanding loan is very high.

Aside from wanting to reduce their overall monthly mortgage payment amounts and save money, some of the most common reasons why homeowners may choose to remortgage include:

* The property value has rapidly increased since the first mortgage was taken out, making the homeowner eligible for lower rates.
* If there is the concern that interest rates may go up.
* In order to pay off the mortgage earlier if the current deal will only allow small over-payments.
* To be able to raise capital more cheaply on low rates (for the purposes of home improvements, paying off other debts, etc.).
* For a more flexible mortgage that will allow some payments to be missed (what is known as a ‘payment holiday’).

Before remortgaging, it is important that a homeowner carefully assesses all the cost implications. For example, they may be required to pay an early repayment charge to the existing mortgage lender which can be high, as well as a small exit fee. These should be compared with the savings that can be made by switching to a lower mortgage.

= Find out more =

=== Related articles on Designing Buildings Wiki ===

* Buy-to-let mortgage.
* Collateral.
* Construction loan.
* Council of Mortgage Lenders.
* Equity in property.
* Freehold.
* Funding options.
* Green mortgage.
* Ground rent.
* Land value.
* Leaseback.
* Mezzanine finance.
* Property chain.
* Property ownership.
* Shared equity / Partnership mortgage.
* What is a mortgage?

[[Category:Cost_/_business_planning]] [[Category:Property_development]] [[Category:Public_procedures]]